New Coalition Government During Sea Change In German Politics

New Coalition Government During Sea Change In German Politics

Thursday 25th November 2021 – 07:30 (GMT)

German politics entered a new era following a coalition agreement between the Social Democratic Party (SPD), the Greens and the Free Democratic Party (FDP).

The three parties, known as the “traffic light coalition” owing to their colours – red, green and yellow – hammered out the deal during two months of intense negotiations after the SPD won a slim margin during the September national election.

SPD leader Olaf Scholz will succeed Angela Merkel as German chancellor following her four terms at the helm. Ms Merkel’s own party, the Christian Democrats, suffered their worst ever result at the polls – forcing them into opposition for the first time in 16 years and only the third time since the second world war.

FDP leader Christian Lindner is set to become the country’s new finance minister, with the pro-business leader vowing during his election campaign to reactivate Germany’s “debt brake” (i.e. a rule that means no budget deficits) and demand stricter fiscal discipline in the eurozone.

The smallest of the three coalition parties, the hawkish FDP is viewed by some analysts as too conservative in its economic thinking and could pose a threat to the ongoing pandemic recovery plan, leading to euro weakness immediately following the announcement.

With one of the youngest average ages in German history, the new government’s most urgent priority will be to stem a pandemic that is threatening to swamp Germany’s hospitals. Authorities reported record new coronavirus infections as vaccine uptake across the country remains low.