German Chancellor Olaf Scholz has lost a vote of confidence

German Chancellor Olaf Scholz lost a confidence vote in the country’s Bundestag on Monday, paving the way. early elections in February.

Scholz was expected – and hoped – to lose the vote, and in November he called the vote start the elections earlier than plannedwhich were initially planned for autumn 2025.

It is only the sixth time in German history that such a vote has been held, and the fourth time that a president has failed in the vote.

Scholz said on Monday that he had called votes not only for the parliament but for the entire electorate.

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

Scholz dismissed the former finance minister Christian Lindner in November, ending the German coalition that had been in power since 2021. It consisted of Scholz’s Social Democratic Party (SPD), Lindner’s Free Democratic Party (FDP) and the Green Party.

The SPD and the Green Party have remained in government as a de facto minority government, and will continue to do so after Monday’s vote until the new Bundestag is formed. Without the parliamentary majority needed to pass the laws, Scholz, however, is seen as a lame duck.

The tripartite coalition government was hit by disagreements over budgets and economic policy positions. The tension came to a head With a paper written by Lindner in which he outlined his vision for the revival of the German economy. However, the former finance minister also argued against the basic positions of the SPD and Green parties in the paper.

The parties also struggled to finalize Germany’s 2025 budget and ultimately failed to reach a settlement.

The government will now operate under an interim budget until the Bundestag enacts its own budget – Germany’s finance ministry said on Monday it expects an interim spending plan for 2025 as early as the middle of next year.

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

The German Constitution sets out various procedures to ensure that the dissolution of a government is as peaceful as possible and to avoid the political turmoil of the Weimar Republic in the 1930s—a turbulent time that was pivotal in its time. Nazis in Germany.

The campaign for the 2025 election has already begun, and German parties have discussed initial policy proposals on key issues such as immigration, the economy, taxes, the debt brake and social security. Full manifestos will be released in the coming weeks.

The parties have also announced which of their candidates they would elect to be chancellor if they get the majority of the votes. Despite the collapse of Scholzen’s coalition, he has been selected as the SPD’s chancellor candidate, and opposition leader Friedrich Merz will take over from the CDU.

The CDU, together with its Bavarian affiliate, the Christian Social Union (CSU), is currently the leader surveys and it looks set to emerge as the largest party, with Merz in first place and Scholz as chancellor. The CDU/CSU is then expected to enter a coalition with the SPD or the Green parties to form the next German government.

Kallum Pickering, chief economist at Peel Hunt, said on Monday that regardless of the outcome of the election, Germany’s economic woes were likely to force a deal on new fiscal aid.

“Even if you don’t get a debt brake change in the first three to six months of the new administration, if they have enough of a majority, I think eventually they will be forced to accept the reality that economic conditions require fiscal stimulus,” Pickering told CNBC.Street signs Europe.”

“The moment you get the German fiscal stimulus, I think a lot of things start to look better,” he added.