Scholz to hold January confidence vote as minister sacked

German Chancellor Olaf Scholz will hold a confidence vote in mid-January, which could trigger new elections by March.

It comes after he fired his Finance Minister Christian Lindner after weeks of wrangling over economic direction of the government.

Mr Scholz said he had sacked Mr Lindner because he there was no longer any "basis of trust", making it impossible to work together.

"He has broken my trust too often... Serious government work is not possible under such circumstances," Mr Scholz told a press conference.

The move came amid a tense row threatening the three-party coalition government between Mr Scholz's Social Democrats, Mr Linder's Free Democrats (FDP) and the Greens.

Crunch talks were held to prevent a collapse of Mr Scholz's fractious coalition government, hoping to focus minds on unity on the day Donald Trump was reelected to the White House.

Fiscal hawk Mr Lindner had proposed sweeping reforms to jumpstart the troubled German economy that the other two parties opposed, and had long flirted with bolting the unhappy coalition.

He had repeatedly warned of "an autumn of decisions" as difficult budget talks have loomed.

Discord on how to revive Germany's flagging economy and carve up a tight budget has flared dangerously for weeks between Mr Scholz's Social Democrats and his junior partners.

Newspaper Bild had earlier reported that Mr Lindner had recommended early elections in 2025 as a solution to the budget impasse, a proposal Mr Scholz had rejected.

It reported that he told the other parties that the talks of recent days had shown there was not enough common ground on economic and financial policy.

It was unclear if Mr Lindner's dismissal would lead also to the departure of the FDP from the coalition.

Without the FDP, Mr Scholz could continue to head a minority government, either alone with his Social Democrats or with the Greens, the second largest party, relying on cobbled together ad hoc parliamentary majorities.

'Worst time to fail' - German vice chancellor

Mr Scholz has urged pragmatism over ideology from his two junior coalition partners and told them: "If you want to, you can reach an agreement."

Earlier, he pointed to the divisive US election campaign and, without directly addressing the tense coalition talks, made an appeal for German unity.

"We may have different political and social views, but we live in one country," he said. "There is more that unites us than divides us."

Vice Chancellor Robert Habeck of the Greens has warned that the US presidential election, Germany's economic woes and the Ukraine and Middle East wars make this "the worst time for the government to fail".

After Mr Trump triumphantly declared victory, Mr Habeck urged the warring parties in Berlin to come to their senses, telling them that now "the government must be absolutely capable of action".

Live: Trump returning to White House after election win

The return of Mr Trump, whose isolationist and "America First" policies are widely seen as potentially damaging for Europe's economy and security, only bolsters the need for a decisive government in the bloc's main power, officials said.

"The only consequence of this US election result must be that Germany cannot be absent from Europe," Mr Habeck said.

Germany was a frequent focus of Mr Trump's ire during his 2017-21 term as president due to its trade surplus with the United States and low spending on defence.

Mr Scholz and his mutinous coalition partners have drawn withering fire from conservative opposition leader Friedrich Merz of the CDU, who has demanded new elections in which polls suggest he would be the frontrunner.

"We cannot afford to argue for another year," CDU politician Norbert Roettgen said after Mr Trump's victory.

"Germany is important in Europe, and if the government can't live up to that, then it must make way now," he added.

With the German economy expected to shrink for the second year in a row, Mr Lindner had demanded widespread measures, including corporate tax cuts, eased climate regulations and a cut in social benefits.

Most of those ideas are anathema to Mr Scholz's SPD, Germany's traditional workers' party, and the left-leaning Greens of Mr Habeck who is also economy minister.

In recent weeks the dispute has seen Mr Scholz, Mr Lindner and Mr Habeck present contradictory economic plans and hold rival meetings with business leaders, deepening the sense of dysfunction and weakening Scholz's authority.

Expert warns of 'slow-motion train crash'

"While all eyes are on the US elections this week, German politics seem to have become a train crash in slow motion," Carsten Brzeski of the ING Economics think tank wrote at the start of the week.

"The German government has just entered a new stage of a slow burning political crisis that could be the last step before the eventual collapse of the governing coalition,"

Political analyst Ursula Muench said yesterday hat she was narrowly betting on the survival of the German government.

The US election outcome might also help set the mood music, said the head of the Academy for Political Education in the city of Tutzing.

With a Trump victory, Ms Muench said: "There is of course a lot to be said for not also having a new government in Germany."