Representatives of German industry called on Thursday for a snap election following the collapse of the center-left coalition amid growing uncertainty for the country’s economy, coming at a time of the reelection of former U.S. President Donald Trump and ongoing wars in Gaza and Ukraine.
“Every additional day with this government is a lost day,” emphasized Dirk Jandura, president of the Federal Association of Wholesale, Foreign Trade and Services (BGA).
“We are calling for new elections as quickly as possible.”
The break-up came at a critical juncture for Europe’s biggest economy, just hours after Donald Trump won the U.S. presidential election, raising the specter of a tit-for-tat trade war with Germany’s main trading partner.
Chancellor Olaf Scholz on Wednesday sacked his finance minister Christian Lindner, paving the way for a snap election after months of bickering in his three-party coalition that has further hurt confidence in an economy struggling with high energy costs and eroding competitiveness.
The world’s third-largest economy has lagged the European Union average since 2021 and is expected to shrink for the second year running in 2024, making it the worst performer among the Group of Seven major economies.
The coalition collapse is likely to deal another blow to consumption and investment in coming months, already poised to decline, with a third of German companies indicating in a recent survey plans to scale it back.
Christoph Ahlhaus, the managing director of the German Association for Small and Medium-sized Businesses (BVMW), stressed that a vote of confidence in January, as planned by Chancellor Olaf Scholz, would be far too late. “This chancellor no longer has any trust,” he said.
The Association of the Automotive Industry (VDA), the Association of the Chemical Industry (VCI), and the Association of the Electrical and Digital Industry (ZVEI) also demanded a snap election.
VDA President Hildegard Muller said that the wars in Ukraine and the Middle East, Donald Trump’s election victory in the U.S., a new European Commission, unresolved trade issues with China, and the uncompetitive state of Germany as a business location required a maximally capable and decisive federal government as soon as possible.
In the view of Peter Adrian, president of the Association of German Chambers of Industry and Commerce (DIHK), the German economy currently needs nothing more than confidence in an economic policy course that finally improves the conditions for investment and growth. Hence, he expressed hope for a short transitional phase.
Tim-Oliver Muller, chief executive of the German Construction Industry Association, described the timing of the center-left coalition collapse a few days before the decision on the supplementary budget for 2024 and the budget resolution for the coming year as bitter for the economy.
In the crisis, he said, it is the hour for political responsibility from all democratic parties. “Including the opposition, led by the (conservative Christian Democratic Union) CDU with (its leader) Friedrich Merz,” Muller highlighted.
“They are all now called upon to support at least the supplementary budget for 2024 and ideally an emergency budget for 2025 – so that Germany does not come to a standstill,” Muller said.
