Uncertainty looms for Germany after Scholz coalition collapses

Germany enters a period of political uncertainty Thursday after its fragile three-party ruling coalition collapsed on the same day Donald Trump won the U.S. election.

Chancellor Olaf Scholz—who announced a January confidence vote, likely followed by snap elections in March—will seek to reassure his European partners at a summit in Budapest.

Scholz said late Wednesday he would reach out to conservative opposition leader Friedrich Merz, who is leading in opinion polls, for support in passing crucial bills on the economy and defense.

The end of his fractious three-way coalition, which deprives him of a governing majority, could not have come at a worse time for Europe's biggest economy, which is set to shrink for a second year in a row.

"The early end of the coalition leaves Germany somewhat rudderless in what could be an exceptionally turbulent time right after Donald Trump won the U.S. election," wrote Berenberg bank analyst Holger Schmieding.

However, Schmieding noted that a snap election and new leadership in early 2025 may ultimately help, as "the constant bickering within the now-defunct three-party coalition had turned into a major obstacle to growth."

Scholz heads to an EU summit in Budapest on Thursday to discuss multiple global crises, chiefly Ukraine's war with Russia and the Middle East conflict, all impacted by the looming change in the White House.

EU leaders are gathering for the talks hosted by Hungarian Prime Minister Viktor Orban, a Trump supporter and one of the EU's main skeptics of support for Kiev.

'Petty political tactics' 

After months of bitter infighting, the three-way coalition between Scholz's Social Democrats (SPD), the Greens, and the business-friendly Free...