Germany’s coalition government, which collapsed in dramatic fashion on Wednesday night after almost three years in power, was always an odd throuple.
A pact between three parties with three quite different histories and different priorities, it was made up of two outfits that have traditionally located themselves on the left of the political spectrum – the Social Democratic party (SPD) and the Greens – and one, the liberal Free Democrats (FDP), that had until then been a loyal junior partner to the conservatives.
Their instincts seemed contradictory: expanding the state but also shrinking it back, unleashing business but also reining it in, wanting to break things but also guaranteeing no one gets cut by the shards. The coalition’s nickname – Ampel or “traffic light”, after the parties’ traditional colours – signalled confusion: if the red, yellow and green lights are all on at the same time, do you wait or go?
Yet when it formed in the winter of 2021, at the end of Angela Merkel’s 16-year reign, this oddball alliance felt like the dawn of something new: an appropriate government for a political landscape no longer dominated by one big party on the right and one big party on the left but resembling that of the Netherlands, with more and more smaller parties taking positions in between.
And in its first year in power, unorthodox thinking was precisely what was called for. Amid the upheaval that followed Russia’s invasion of Ukraine, the Ampel, fronted by the Social Democrat chancellor, Olaf Scholz, showed the daring it had promised in its coalition treaty, halting the Nord Stream 2 pipeline project, announcing a historic U-turn on defence spending and weaning itself off Russian gas at remarkable speed. A €9-a-month nationwide transport ticket, introduced in the summer of 2022 to help people cope with a resulting soar in energy prices, was a hit.
But it was after the energy crisis seemed to have been weathered that the government ran into trouble. In the government’s early days, party outriders had emphasised the commonalities between the three parties: the Greens and the fiscally conservative FDP were at their core about sustainability, it was said: one in the ecological, the other in the economic sense. But as soon as it came to the future of the German car industry, ecological and economic sustainability dictated quite different policies, and the FDP blocked a combustion engine phase-out that the Greens were pushing for.
In practice, Germany has for the past three years been run not so much by a three-party coalition, but by three distinct two-way coalitions, argues Andreas Busch, a professor of political science at the University of Göttingen. “The SPD and the FDP teamed up on economic issues, the SPD and the Greens worked together on social policies, and the Greens and the FDP joined forces on civil rights concerns, such as the legalisation of cannabis and data protection.”
More often than not, the third wheel applied the brakes, and as a result many of its policies were stop-start. Scholz announced an epochal turn on defence matters but then procrastinated on export of heavy arms to Ukraine. The Greens pushed for heat pumps to replace gas heaters in German homes but were forced to backtrack, leaving a fledging industry in a mess. “We expected creative destruction, but instead we got destruction and none of the creativity,” says Busch.
Even the potheads are unhappy with a cannabis legalisation that is, for want of another word, half baked. The possession and home growing of cannabis for personal use has been decriminalised, but the government stepped back from plans to allow its sale through pharmacies, and the distribution of weed through registered “cannabis clubs” has been hampered by bureaucracy.
At times, it felt like the three parties thought they were governing three completely different countries: the Greens believed in a Germany that could become Scandinavian, patriotically rallying around a common ecological cause. The Social Democrats thought they were leading a Germany of the 1970s, with Scholz calling the shots like a modern-day Helmut Schmidt. And the FDP thought they were governing a Germany of the future, where German cars were an export hit because they ran on environmentally friendly but affordable e-fuels that have yet to be invented.
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The ultimate area where the three parties could not triangulate a common ground was fiscal policy. Initially, the government had planned to fund additional spending on defence and climate measures with untapped emergency credit originally secured to deal with the pandemic. But a constitutional court ruling in November 2023 annulled that and left the Ampel squabbling at increasing volume over how to plug the resulting multibillion hole in the 2025 budget.
After Scholz sacked the FDP finance minister, Christian Lindner, on Wednesday, he criticised the liberal politician for insisting that aid for Ukraine must be drawn from the regular budget. Lindner replied that loosening the debt brake mechanism would have contradicted his “oath in office” – a claim whose accuracy legal and economic experts question.
Germany’s strict commitment to balanced budgets is well known – a “debt brake” that limits the budget deficit to 0.35% of GDP was enshrined in the constitution in 2009. But in the FDP, a liberal party has held the purse strings at the finance ministry for whom balancing the books is an article of faith. “For the FDP, the debt brake is a lifeline the party is clinging on to while it struggles in the polls,” said Rolf Langhammer, a trade expert at the Kiel Institute for the World Economy.
Even if Lindner were to return to his post in a more conventional, conservative-led coalition after elections next year, it will still have to crack the same fiscal nut. “After Trump’s election, defence budgets in Europe will have to rise, and the debt brake cannot continue to exist in its current form,” said Langhammer. “It will have to be loosened, or at least be reformed.”
With the traffic light having got stuck on red, a new start for Germany may well be what is required. But whatever coalition emerges will still have to come up with unorthodox solutions.
