Germany’s government collapsed, what now?

Germany’s government collapsed on Monday after Chancellor Olaf Scholz lost a vote of confidence — one he called himself, expecting to lose. The vote will dissolve parliament and leave Europe’s largest economy in the hands of a caretaker government until general elections take place on Feb. 23, which Scholz calculated was his best chance at a breakthrough in the gridlock in Berlin. The writing had been on the wall for quite a while: Scholz’s three-party “traffic light coalition” disentangled over budgetary and economic reform disagreements in early November.

Speeding up the election timeline is good news for a country that is in desperate need of leadership. The next Chancellor will have to confront economic and fiscal crises, quell growing populist sentiment, bridge social divisions, and stand up to NATO-weary Donald Trump.

Who will lead Germany next? Scholz will run again, but his main competitor and leader of the center-right Christian Democratic Union, Friedrich Merz, is favored to win. If he can peel off at least one of the traffic light coalition’s partners, he’ll likely be able to create a CDU-led majority. However, the size of the next ruling party's coalition will be key in their ability to enact aggressive policies like removing or loosening Germany’s debt brake. If populist fringe parties on the far-left and far-right together secure at least a third of the seats in the Bundestag, major overhauls will remain difficult.