Disagreements over the budget and economic policy threaten Chancellor Olaf Scholz’s coalition, Deutsche Welle has reported
Chancellor Olaf Scholz’s government is facing internal disagreements over Germany’s economic policy and the 2025 federal budget, according to state broadcaster Deutsche Welle (DW). These disagreements are reportedly so severe that they threaten the stability of the three-party coalition, which is described by DW as entering a “crisis mode.”
The German parliament is scheduled to vote on the 2025 budget by the end of November. The Budget Committee will review the final draft on November 14. DW reports that the budget draft still includes a deficit of “several billion euros” and the coalition partners are struggling to agree on how to address this shortfall.
Last week, German media reported on a policy paper authored by Finance Minister Christian Lindner, leader of the Free Democratic Party (FDP). This 18-page document advocates for a radical shift in Germany’s economic policy, including substantial tax cuts for businesses, reduced funding for climate protection programs, and lower welfare spending.
Scholz’s Social Democrats (SPD) have strongly criticized the plan. “We do not need any papers, but joint action to help the industry quickly and ensure security,” Martin Rosemann, the SPD’s labor market and social policy spokesperson in the national legislature, told Tagesspiegel last week. “Above all, we do not need any opposition in the government,” he added.
Earlier, Economy Minister and Vice Chancellor Robert Habeck, a member of the Green Party, proposed a multibillion-euro “Germany Fund” in his own policy paper. This fund would be financed through debt and aimed at stimulating investment and encouraging a transition to a climate-neutral future. However, Lindner and the FDP opposed the proposal.
“We simply cannot spend as much money as some people want,” the finance minister said at the time.
With German parliamentary elections scheduled for next September, all three coalition parties are seeking to boost their popularity, often at the expense of government unity, according to DW. Last month, Scholz held a meeting with German business leaders and trade union representatives but did not invite either Habeck or Lindner. The finance minister responded by organizing a similar meeting of his own.
”The popularity ratings of the coalition government have plummeted,” DW reported, adding that the “outlook is grim” for all three parties. The broadcaster also suggested that the FDP might withdraw from the coalition entirely, leaving Scholz with a minority two-party government with the Greens. Such an outcome would require Scholz to seek ad-hoc coalitions in parliament for each government initiative requiring a majority vote.
Scholz has dismissed the idea of irreconcilable differences within his cabinet. “The government will do its job,” he told journalists on Monday, when asked about the situation within the coalition. “I am the chancellor, it’s about pragmatism and not ideology,” he added. According to DW, the coalition is planning a series of meetings this week to attempt to resolve their differences.