German Chancellor Olaf Scholz loses the vote of confidence

German Chancellor Olaf Scholz lost a vote of confidence in the country's Bundestag on Monday, paving the way for new elections. Early elections in February.

It was expected – and hoped – that Schulz would lose the vote, which he himself called for in November – Holding earlier elections than plannedwhich was originally scheduled for fall 2025.

This is only the sixth time in German history that such a vote has been held, and the fourth time that a president has made a mistake during the vote.

Schulz said on Monday that he called for a vote not only for parliament but for all voters.

“Do we dare to be a strong country and invest aggressively in our future,” Schultz told lawmakers before the vote, according to a Google translation.

Schulz fired the former finance minister Christian Lindner in November, effectively putting an end to Germany's ruling coalition that had been in power since 2021. It consisted of Schulz's Social Democratic Party (SPD), Lindner's Free Democratic Party (FDP) and the Green Party.

The Social Democrats and Greens remain in government as a de facto minority government, and will continue to do so after Monday's vote, until a new Bundestag is formed. Without the parliamentary majority needed to pass laws, Schulz is widely viewed as a lame duck.

The three-party coalition government has been plagued by disagreements over budget and economic policy positions. Tensions reached their peak With a paper by Lindner, he outlines his vision for reviving the German economy. However, the former Finance Minister also opposed the basic positions of the Social Democratic Party and the Green Party in the newspaper.

The parties also struggled to finalize Germany's 2025 budget, and ultimately appeared unable to reach a solution.

The government is now set to operate under an interim budget until the current Bundestag implements its own budget, with the German Finance Ministry saying on Monday that it expects an interim spending plan for 2025 no later than the middle of next year.

German President Frank-Walter Steinmeier now has 21 days to dissolve parliament. New elections must then be held within 60 days of this dissolution, with the date already set February 23.

The German constitution sets out a series of measures aimed at making the disintegration of the government as quiet as possible and avoiding the political turmoil of the Weimar Republic in the 1930s – a turbulent period that played a major role in Germany's rise. Nazis in Germany.

Campaigning for the 2025 elections has already begun, with German parties discussing initial policy proposals on key topics such as immigration, the economy, taxes, debt control and social security. Full data is likely to be released in the coming weeks.

The parties also announced which of their candidates they would choose for chancellor if he won the largest share of the vote. Despite the collapse of Schulz's coalition, he was elected as Chancellor's candidate for the Social Democratic Party, while opposition leader Friedrich Merz will take on this role for the Christian Democratic Union.

The CDU is currently led, along with its Bavarian branch, the Christian Social Union (CSU). Opinion polls It appears that it will emerge as the largest party, putting Merz in a prime position to succeed Schulz as chancellor. The CDU/CSU is then widely expected to enter into a coalition either with the SPD, or in a less likely scenario with the Green Party, to form the next German government.

Callum Pickering, chief economist at Bill Hunt, said on Monday that regardless of the election outcome, Germany's economic distress would likely lead to a final agreement on new fiscal support.

“Even if, say, in the first three or six months of a new administration, they don't get changes to the debt brake, if they have a large enough majority, I think eventually the economic conditions will force them to accept the reality that they need to.” “Fiscal stimulus,” Pickering told CNBCStreet signs europe“.

He added: “The moment you get a financial stimulus in Germany, I think a lot of things start to look a little better.”