German government collapses as Scholz sacks finance minister

German Chancellor Olaf Scholz plunged Europe’s largest economy into crisis on Wednesday by dismissing Finance Minister Christian Lindner, prompting the liberal Free Democrats (FDP) to quit the coalition government.

Scholz announced in a televised address that he would seek a confidence vote in January, potentially leading to early elections in March, six months ahead of schedule.

The chancellor said he had offered Lindner a plan to reduce energy costs, increase investment and maintain Ukraine support, but the finance minister had shown “no willingness” to compromise.

“The situation is serious”, Scholz said, citing war in Europe, Middle East tensions and economic stagnation. He emphasised the need for increased defence spending following the U.S. election outcome.

Lindner’s FDP party, polling below the 4% parliamentary threshold, had issued an 18-page ultimatum demanding radical budget revisions. Following his dismissal, other FDP ministers withdrew from the cabinet, ending the three-way coalition with the Social Democrats and Greens.

The finance minister accused Scholz of failing to address Germany’s economic challenges and indicated his party would seek to join a new government. “We remain ready to take responsibility for this country”, Lindner said.

Conservative opposition leader Markus Söder called for immediate elections, declaring “the traffic light coalition is history”, referring to the government parties’ colours.