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How Germany’s Fiscal Orthodoxy Toppled Its Government and Imperils Its Future
On November 6, 2024, Chancellor Olaf Scholz dismissed Finance Minister Christian Lindner, ending Germany’s “traffic light” coalition in dramatic fashion. This wasn’t just a matter of personal differences—it was the inevitable result of a fiscal orthodoxy that has shackled Germany’s economy for over a decade. Dogged adherence to balanced budgets has systematically thwarted critical investments in infrastructure, climate action, and digitalization, while external demand masked the model’s flaws. With export markets shrinking in the United States and China, the enablers of this approach have fallen, exposing deep cracks in the foundations of Germany’s economic model. Yet the political obstacles to dismantling this self-harming paradigm remain formidable.
11.12.2024
