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The ripple effect that Germany’s election could spell across Britain, the US and EU - THE TELEGRAPH
When Donald Trump won the US election in November, Germany’s government imploded.
Chancellor Olaf Scholz sacked his finance minister, collapsed his dysfunctional coalition government and blew a gaping hole in the leadership of the EU.
On Sunday, Germans head to the polls for one of the most consequential elections of recent times in the EU’s largest economy and most influential country alongside France.
The war in Ukraine remains deeply divisive. The far-Right AfD is enjoying unprecedented popularity after a string of terror attacks. The economy is in trouble, and now faces US tariffs.
“The top two topics are the economy and migration,” said Jessica Berlin, a senior fellow at the Center for European Policy Analysis (Cepa) think tank.
“We’re seeing security take a prominence in the debate and discussion like never before, it’s ranked third in terms of what German voters are concerned about their choices.”
So what will this mean for Europe?
“You could say that when Germany sneezes, Europe catches a cold,” an EU diplomat told the Telegraph.
Who will win?
Mr Scholz, 66, the centre-Left Chancellor and leader of the SPD, is polling in third at 16 per cent of the vote and is seen as a dead man walking.
Friedrich Merz, 69, the leader of the centre-Right CDU, is the favourite to be the next Chancellor with a predicted lead of about 29 per cent.
The Eurosceptic, pro-Putin and anti-migrant AfD is polling in second with 21 per cent, although it is almost certain to be shut out of any future coalition talks because of the “firewall” against extremists in a country haunted by its Nazi past.
Germany’s mainstream parties have ruled out negotiations with the AfD but the Trump administration is piling on the pressure to allow them into government.
“There’s no room for firewalls,” Vice-President JD Vance said at the Munich Security Conference this month after the party was endorsed by Elon Musk.
The vice-president met Alice Weidel, the AfD leader, straight after that speech - having snubbed Chancellor Scholz for a similar meeting.
German coalition talks typically take months before an agreement is reached. But this round could be even more complicated as German politics fragments.
The Greens (13 per cent), who are europhile and hawkish on Ukraine, are bleeding youth support to the Leftist populists Die Linke (6 per cent).
The hard-Left Kremlin-friendly BSW, which split from Die Linke last year, is expected to clear the 5 per cent threshold for entry into the Bundestag.
The SPD could form an unlikely Left-wing bloc but that risks being even more fratricidal than the outgoing SPD-Green-FDP alliance.
The most likely outcome is a CDU-led coalition with the SPD and/or the Greens. That won’t be easy if the socialists want a spell in opposition to lick their wounds or the Greens balk at Mr Merz’s climate policies.
In the final weeks of the campaign, Mr Merz accepted AfD support for a parliamentary resolution calling for tougher immigration rules and was accused of weakening the firewall.
Reinhard Bütikofer, a former Green MEP, said he believed Mr Merz would not breach the firewall but it could be undermined with pacts struck at regional levels of government.
“I would say that there’s more volatility with regards to the democratic system altogether than we’ve seen in many years,” he said.
As for Mr Scholz, he won’t be missed.
“He is a historically unpopular Chancellor who will be primarily remembered for delaying aid to Ukraine and failing to deliver on the renewal of the German armed forces, ” Ms Berlin said.
He had, “a lack of empathy and ability to build or maintain strong strategic relationships, whether with our key allies or within his own coalition, which of course fell apart”.
The EU
Germany is an overwhelmingly pro-EU country with membership seen as both an economic necessity and moral imperative after two world wars.
EU diplomats expect Mr Merz to be more effective in Brussels than Mr Scholz, who never “got” the EU.
Germany has been missing at the European level since Scholz took over from Angela Merkel, who was nicknamed the “Queen of Europe” during her 16-year-term.
Disagreements within his “traffic light” coalition have delayed EU-wide initiatives and frustrated allies.
Mr Scholz’s relationship with Emmanuel Macron is so poor that the traditional “engine” of EU policymaking, Paris and Berlin, has badly stalled.
Mr Merz is a former MEP who worked as a BlackRock executive after being sidelined by Angela Merkel before making his political comeback.
He understands how Brussels works. He will drive a more transactional relationship with the EU. In some areas, he will push back against excessive Brussels overreach while providing direction in areas European action is seen to be in the national interest, such as the Single Market.
Ursula von der Leyen, the European Commission president, is also a member of the CDU and, on paper, should be a powerful ally.
But she is from the opposite wing of the party to the Right-wing Mr Merz and was a protege of his old rival Mrs Merkel.
She has built a power base in Brussels after steering the Commission through the pandemic and the first three years of Russia’s war on Ukraine.
The leaders could tussle for influence but sources insisted the two will ultimately come to an understanding.
Mr Merz recently claimed he had built a close relationship with Mrs von der Leyen and was speaking to her regularly.
Net Zero
Merz’s CDU delighted in poking holes in Mr Scholz’s green policies, such as compulsory heat pumps, during its time in opposition.
Mr Merz has made clear that decarbonisation cannot come at the price of crippling German manufacturing, exports or the economy.
Green regulations have been blamed for adding to the burden on businesses during a cost of living crisis.
He has vowed to build 50 new gas fired power plants to plug the gap left by Russian energy since the war in Ukraine.
If he forms a government, it will be expected to push for a delay in the 2035 deadline for the EU’s effective ban on petrol and diesel engines in a nod to the powerful German car lobby.
Sources in Brussels suggested Mr Merz would not take aim at the Net Zero target itself, which is a flagship von der Leyen policy.
Instead he would look to slow the shift, while encouraging the EU to cut red tape and regulation in a boost to the bloc’s competitiveness.
Migration
Mr Scholz is one of a shrinking number of centre-Left leaders in Europe, which has swung Rightwards.
Attitudes towards asylum and migration have hardened: EU leaders last year discussed the once-taboo subject of offshore detention camps for failed asylum seekers.
Mr Scholz was reluctant to back such plans but under pressure from the AfD and CDU, he strengthened border controls with neighbouring EU counties after a terrorist attack in Solingen.
Mr Merz has long since repudiated Mrs Merkel’s open-doors migration policy and even praised the now ditched Rwanda plan. He plans strict new immigration rules and will back them at European level as well.
Britain
Sir Keir Starmer and Mr Scholz have been friends for years and share similar centre-Left politics.
Mr Merz does not have the same personal connection with the Prime Minister but he will push for a closer UK-EU relationship in trade and youth mobility.
“We want to deepen relations with third countries, above all with the United Kingdom, wherever possible,“ David McAllister, a CDU MEP and chair of the European Parliament’s foreign affairs committee, told the Telegraph.
“If anything the CDU is more wedded to us than the SPD,” said Anand Menon, of the UK in a Changing Europe think tank.
However, that won’t extend to Berlin ordering Brussels to bend its rules to get a deal in the new Brexit talks
Ukraine
Before Donald Trump’s return to the White House, Mr Scholz and Mr Merz agreed on the necessity of supporting Ukraine, despite the divisions in their own parties.
The more hawkish Mr Merz was willing to supply Ukraine with long-range Taurus missiles, which Mr Scholz was not.
Under Mr Scholz Germany was a crucial supplier of aid and weapons to Ukraine but the Chancellor was slow and over-cautious.
On the campaign trail, he has styled himself the “peace chancellor”, insisting that nothing should be done to risk the war in Ukraine escalating into a conflict with the wider West.
Mr Trump’s decision to begin peace negotiations with Russia has destroyed the West’s consensus over the three-year war.
The CDU leader accused Mr Trump of swallowing the “Russian narrative” and was shocked after the president called President Zelensky a “dictator”.
He has called for the EU to build up its strength rather than “beg” for a seat at the negotiating table and warned it faced “a paradigm shift in its entire foreign and security policy.”
That means German support for deeper EU integration in defence and foreign policy.
“We must prepare for the possibility that Donald Trump will no longer uphold Nato’s mutual defence commitment unconditionally,” Mr Merz said in an interview on Friday before suggesting Europe might need the protection of Britain and France’s nuclear umbrella.
Defence
Mr Scholz announced €100 billion (£83 billion) to overhaul the neglected German army after the invasion of Ukraine.
Progress since that hugely symbolic moment has been as pondersome as the Chancellor himself.
In the meantime inflation and other economic pressures have nibbled away at the fund.
With Trump back in the White House, defence spending is very much a live international issue for a rich Nato country like Germany that runs a large trade surplus with the US.
Last year, Mr Scholz said he would hit the 2 per cent Nato defence spending target but that fell far short of what his defence minister Boris Pistorius wanted.
Mr Merz might be open to considering joint European borrowing to ramp up defence spending, and to loosen Germany’s constitutional rules on public debt.
But he won’t commit to more than the 2 per cent minimum.
“Only the Green Party leaders have, during this campaign, publicly said that they support spending 3.5 per cent of GDP on defence. Nobody else says that,” Mr Butikofer said.
Diplomatic sources in Berlin suggested Mr Merz and Mr Scholz were not being realistic.
They said it was unlikely Mr Trump would be satisfied unless the figure was closer to 5 or even 6 per cent.
Trump, trade and the economy
The war in Ukraine robbed Germany of the cheap Russian gas which powered its world-leading manufacturing and exports.
After five years of stagnation, the economy is now 5 per cent smaller than it could have been if the pre-pandemic growth trends had continued.
Inflation is the highest it has been for almost 50 years and the economy shrank for the second year in a row in 2024.
Now Donald Trump is threatening Europe with tariffs, which will hit an already struggling German economy.
Germany will have to rely on the European Commission to fight any trade war with Trump.
But Berlin will know that EU unity is key in any negotiation with Mr Trump, who may look to divide and conquer the member states.
For example he could slap German cars with tariffs while sparing the Trump-friendly Georgia Meloni of Italy the same.
There is also the pressing need to convince reluctant German businesses to modernise.
The CDU is pledging tax cuts for individuals and companies and wants to raise the threshold for the highest level of income tax.
It hopes to make working overtime more attractive, cut the VAT on dining out, reform the benefits system and abolish a tax once levied to finance the costs of integrating East Germany.
Critics suggest Mr Merz is thinking too small.
A European diplomat predicted that the pressure on boosting defence spending, modernising infrastructure and paying for pensions for an aging population would tell.
The envoy predicted that Mr Merz, a fiscal conservative, would have to reform Germany’s constitutional debt brake to allow for more investment.
The Chancellor-in-waiting has ruled out changing the rule, which limits government borrowing by limiting the budget deficit to 0.35 per cent of GDP, to pay for social welfare policies but is open to changes to boost the economy.
Mr Scholz has vowed to reform the brake after the election. He argues that Germany’s public debt is far less than other similar economies such as the UK, Italy and France.
But any changes are controversial in a country with painful historic memories of sky-high inflation that still inform policy making today.
Mr Scholz’s desire to reform the brake put him on a collision course with his FDP coalition partners and led to the collapse of his ill-starred government.
Even if Mr Merz does grasp the nettle, it won’t be enough.
Germany will ultimately be forced to break EU budget deficit rules, the diplomat said and added, “In other words, it will become like every other European country.”
What’s next?
A not so Grand Coalition between the CDU and SPD would recall the discredited Merkel years.
A strong showing for the AfD could normalise support for it and spread its influence from its East German strongholds.
“Germany’s problematic election is not this one but the next, “ Anand Menon, of the UK in a Changing Europe think tank, said, “I worry about the election in four years.”
With Germany facing huge challenges, Alice Weidel’s party will be waiting in the wings to pounce if the next coalition falls.
“The AfD is counting on this next government being woefully ineffective and unpopular, setting them up to potentially win in the next elections,” said Ms Berlin of the Cepa think tank.
That could put the German firewall under intense pressure, with potentially seismic consequences for Europe.
In 2027, polarised France elects a new President in a vote which Emmanuel Macron – having served two terms – is barred from contesting.
Marine Le Pen’s National Rally is currently the largest single party in the French parliament.
They have had their differences but could a President Le Pen be visiting AfD Chancellor Weidel in Berlin in a few years time?
That alliance of eurosceptics at the controls of the French-German engine is a nightmare scenario for EU officials that would put even Brexit in the shade.
