Germany’s coalition government has collapsed as Chancellor Olaf Scholz dismissed Finance Minister Christian Lindner, ending the SPD-Greens-FDP alliance over irreconcilable fiscal policy differences. A confidence vote is set for January 15, with likely snap elections in March.

The main contention — the constitutional debt brake — highlights a divide between economic restraint and the need for growth-focused investment. Scholz’s appointment of Jörg Kukies as finance minister signals a pivot toward stimulus-driven policy.

As polls favor the CDU, Scholz may reframe the SPD’s platform around economic modernization. The election outcome will shape Germany’s economic recovery and influence stability within the EU amidst global challenges.