WARSAW, Poland — WARSAW, Poland (AP) — The collapse of Germany’s governing coalition and President-elect Donald Trump’s imminent return to the White House are creating new risks for the European Union’s biggest economy, already in a troubling decline.
Germany’s economy has been shrinking for the past two years in the wake of the coronavirus pandemic, war in Ukraine and competition from China. Amid both structural problems at home and global challenges, Chancellor Olaf Scholz’s fractious three-party coalition failed to find a way forward on some key issues.
The situation came to a head Wednesday night when Scholz announced he was firing Finance Minister Christian Lindner. The move effectively meant the collapse of the chancellor’s coalition, which relied on Lindner’s pro-business Free Democratic Party, and left the government bereft of a parliamentary majority.
The coalition’s breakdown followed weeks of internal disputes over how to boost Germany’s ailing economy.
Scholz said he planned to seek a vote of confidence in parliament on Jan. 15, a move that could lead to an early election by the end of March if he loses. Germany’s next regularly scheduled election is not until September. In the meantime, he said he would reach out to opposition leader Friedrich Merz of the center-right Christian Democrats to discuss ideas for strengthening the country’s economy and defense.
But business leaders called Thursday for Scholz to act much more quickly to produce a stable government that is poised to tackle the crisis.
“Every additional day with this federal government is a lost day. We demand new elections as soon as possible,” said Dirk Jandura, president of the German wholesale lobby BGA. “Germany needs an economic turnaround. We have to turn the tide before the waves get too high.”
The coalition’s collapse came in the final hours of a day in which European leaders began to digest the certainty of another Trump presidency, which will have serious implications for European security and the economy.
“At the European level, political instability in Germany is not good news,” Antonio Villafranca, vice president of the Italian think tank ISPI, said, noting that a strong Franco-German alliance at the center of the European Union provided an important counterweight during Trump’s first presidency.
Trump has threatened a withdrawal of NATO commitments and a fundamental shift of support for Ukraine in its war with Russia. He has also threatened to slap tariffs…
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