Germany is stuck in a centrist trap The political extremes are gaining ground

The CDU has just declared victory — but Germany is as lost as ever. From its dysfunctional economic model to its ineffective army and the lack of leadership in Europe faced with Donald Trump’s onslaughts, the Federal Republic’s urgent problems will not be solved by Friedrich Merz and his winning coalition.

The result came as no surprise. Olaf Scholz is now out of the picture, his SPD suffering its worst ever electoral defeat, with only 16.4% of the votes. The CDU, and its Bavarian sister, the CSU, did a little better. But their combined 28.5% — they had hoped for more than 30% — makes it hard for them to claim a mandate. Meanwhile, the AfD, the hard-Right party supported by Elon Musk, came in at 20.8%, which makes them the main opposition party.

The CDU/CSU, given its firewall against the AfD, is left with no alternative but to form a coalition with the SPD. Angela Merkel governed with this political constellation — the grand coalition — three times. But there was nothing grand about it; it was a coalition of failure. It failed to address the causes of de-industrialisation and it failed to meet Nato defence spending targets. Instead, it cosied up to Vladimir Putin and approved the Baltic Sea gas pipelines from Russia. It failed to resolve the eurozone’s economic crisis and supported the immigration policies which ultimately gave rise to the AfD. This same coalition is now back in the driving seat, albeit under new leadership.

The single most significant — and surprising — result from the weekend was the strong performance of the Left Party. Though largely written off after its most famous politician, Sahra Wagenknecht, split off in 2023 to form BSW, it surged to win 8.8% of the vote (compared with Wagenknecht’s paltry 4.97% — not even enough to win a seat). This now means that together the AfD and the Left Party have more than one third of the votes of the Bundestag — a blocking minority for many important votes, especially for constitutional changes. This, crucially, is why the performances of the small parties mattered far more than whether or not the Greens would be needed to form a coalition. And these parties are going to be a real problem for Merz.

For one thing, the new Chancellor had wanted to travel to the Nato summit this June with a strong commitment to higher defence spending. And even though the Left Party and the AfD hate each other in every other respect, they agree that they won’t give Merz the money to strengthen the Bundeswehr. More important, though, is the fact that they won’t support a reform to the constitutional fiscal rules that Merz and the SPD are desperate for.

Germany’s constitutional debt brake was introduced in 2009 during the fair-weather environment of industrial globalisation, now long gone. The rules, which strictly limit government borrowing, dictate that if Germany wanted to spend more money on defence and aid to Ukraine, it had to be saved from elsewhere. But politically, saving on social spending to pay for Ukraine didn’t play. It’s one of the reasons why the last coalition collapsed. And the new coalition is about to find itself in a similar predicament since, even with the Greens, they are still short of the two-thirds majority necessary to make any constitutional changes.

As a result, the Left Party, which supports reforms to the debt brake in principle, now finds itself wielding pivotal power in the German parliament. If we want to know whether Germany is going to address its most urgent problems — defence spending, infrastructure investment, digitalisation, economic reform — we can’t do so without talking about the Left Party. The successor of the old East German SED and a fixture on the German political scene since unification, the party looked finished in 2023. Even in October last year, it was still only polling at 2.5%, way below the 5% threshold necessary to qualify for entry in the German parliament.

But then, as the Scholz government collapsed in early November, the Left Party managed to hold its first conference without acrimony in many years. With the departure of Wagenknecht, who opposed migration and refused to condemn the Russian invasion of Ukraine, the big ideological debates also disappeared. And at the newly harmonious meeting, the party elected a vibrant new leadership duo, including the previously unknown Heidi Reichinnek. Earlier this year, the young politician delivered a speech in the Bundestag against Merz’s migration policies which immediately went viral. And in an extraordinary reversal of fortunes, the Left Party has become the biggest party for young people — the exact opposite of what happened in 2021, when its core support was made up mostly of East German pensioners.

The party’s success came mainly at the expense of the Greens, following their decision to be open to a coalition with Merz. The Greens have forever been torn between fundis and realos, fundamentalists versus realists. The main attraction of the realists used to be that they were electorally more successful. But that is no longer the case. Robert Habeck, the economics minister, wanted to be a coalition partner to Merz. And, in an age in which voters reward parties that stick to their principles, Reichinnek was able to scoop up all those alienated Left-wing voters.

And so, Germany is splitting between Left and Right, with the centre squeezed in between. Those centrist parties must take much of the blame for this: ironically, the firewall that they erected to protect themselves from the far-Right has only served to strengthen it — along with the far-Left. Indeed, Alice Weidel, the AfD leader, predicts that her party will overtake the CDU/CSU in the next four years. I think this is realistic. At that point, the centrist parties would have no choice but to enter into a coalition with each other to be able to govern. The two-thirds majority is lost.

In the meantime, the centre simply doesn’t have the fiscal space to make any significant economic difference. Merz’s election programme contained €100 billion of unfunded promises. This is in addition to the €600 billion shortfall in those spending promises committed by previous governments. Without the debt brake, its fiscal position would be the same as France.

How could Germany take the fiscal brake off? There are three possibilities. Merz could declare a state of emergency. Only a simple majority of votes is needed for this to pass. But there are strict conditions for its application and it’s hard to imagine a government enacting a state of fiscal emergency to justify higher defence spending. Another option would be the creation of an off-budget vehicle designed for a specific purpose. This has happened in the past: it was activated for the €150 billion climate and transition fund to pay for the Net Zero investments and would require a two-thirds majority to pass. The final option is the constitutional reform of the debt brake — a lengthy procedure that would require the votes of the Left Party.

There are no obvious solutions to Germany’s current predicament. I wouldn’t totally rule out debt-brake reform, but it will be small and limited to ring-fencing infrastructure investment. Meanwhile, the Left Party will make things difficult, especially on defence. The government could, of course, spend less on welfare, but they would struggle to find political agreement on that. What they cannot do, however, is repurpose the climate and transition fund for defence. That, too, would require a two-thirds majority.

Here, then, is the problem with modern Germany.  It’s the same issue that dogs the EU. To get anything done, you need a majority. This is supposed to protect the status quo and prevent unnecessary change. But when change is needed, it produces devastating gridlock.

Can another coalition of short-sighted centrists arrest the decline of the economy, fix the failure of leadership, and free the nation from its pernicious political trap? I think we know the answer.

---