For decades, the Franco-German axis has served as the cornerstone of the European project since its inception. As two of the six founding members of the European Coal and Steel Community (ECSC)—which eventually led to the establishment of the European Union—France and Germany stand as the EU's largest countries in terms of population, economy, and voting weight within the bloc.
The governments in Berlin and Paris faced consecutive collapses between November and December 2024. Germany's coalition breakdown occurred on November 6 due to a conflict over "debt brakes" and borrowing between former Finance Minister Christian Lindner from the liberal Free Democratic Party (FDP) and Chancellor Olaf Scholz, leaving only the Social Democrats (SPD) and Greens in power. France experienced political turmoil when a no-confidence vote, supported by the Left Alliance and the far-right, ousted French Prime Minister Michel Barnier on December 4. Coinciding with these European shifts, Donald Trump's impending inauguration as U.S. president on January 20, 2025, looms on the horizon. As a result, Europe faces the prospect of increased military spending burdens and potential trade wars, likely to further strain the continent's economy.
Collapse of Governments
Various contexts and causes contribute to the political instability in Germany and France:
1. Germany:
Germany's political and electoral system frequently produces ruling coalitions that unite major parties in single governments. For decades, the concept of a "grand coalition" dominated the German parliament, particularly during Angela Merkel's chancellorship. Germany's political landscape has been characterized by stability, with only nine chancellors leading the country over a 75-year period.
In 2021, the Social Democrats won the federal election but failed to secure an absolute majority. The Christian Democratic Union (CDU) saw a decline, prompting the Greens and FDP to join Scholz in forming a "traffic light coalition." However, ideological rifts emerged between the SPD and FDP over economic reforms, taxes, wages, and borrowing limits.
The situation culminated in Lindner's refusal to ease the agreed debt limits or "debt brakes," alongside his push to cut social welfare spending, a cornerstone of the agenda of center-left SPD and Greens. Scholz's dismissal of Lindner caused the FDP to exit the coalition, prompting a no-confidence vote on December 16. During this vote, 394 members of the Bundestag voted against Scholz's government. As a result, Germany now faces snap elections scheduled for February 23, 2025, marking a significant shift in the country's typically stable political landscape.
2. France:
Emmanuel Macron secured a second term as French president in 2022, benefiting from traditional parties' support in the second round to block far-right leader Marine Le Pen from taking power. His party's underperformance in legislative elections, however, resulted in a minority right-wing government led by Elisabeth Borne until January 2024. Gabriel Attal succeeded her, leading a government that faltered during the June 2024 European elections, where Macron's centrist coalition lost ground to Le Pen's National Rally.
In response to Le Pen's rising influence, Macron dissolved parliament, hoping to secure a legislative majority. The July 2024 legislative elections, however, further weakened his position, with his party falling to second place behind the leftist coalition. As a result, the French parliament became fragmented into three political blocs, none of which could form a government. Consequently, the parliament became "hung" and could not be dissolved for a year.
Macron's decision to dissolve parliament created an unnecessary political crisis, particularly as he turned against his alliance with the left in opposition to Le Pen. Refusing to appoint a prime minister with a socialist or radical left background, he instead opted to form a new minority government reliant on support from the National Rally party for legislation related to immigration and asylum policies.
On December 4 of this year, both the left-wing coalition and the National Rally party voted to withdraw confidence from Michel Barnier after just three months in office as French Prime Minister, making him the third prime minister to leave office within a year. The vote stemmed from Barnier's attempt to pass an austerity budget that included a €60 billion reduction aimed at addressing the budget deficit, which had exceeded the limits allowed within the European Union.
Barnier invoked Article 49.3, which permits the passage of legislation without parliamentary approval while granting lawmakers the right to vote on a no-confidence motion. He used this mechanism to push through a bill on social security funding that reduced expenditures in the 2025 budget. As a result, 331 out of 577 members of the French parliament voted to topple Barnier's government.
Following a meeting between President Macron and the parliamentary parties—excluding Jean-Luc Mélenchon and Marine Le Pen—François Bayrou, the leader of the centrist MoDem party and an ally of Macron, was selected on December 13 to lead the new government and prepare the budget proposal. However, the possibility of this government's collapse remains, as new elections cannot be called before July 2025.
The situation presents two main dilemmas. Firstly, the German ally faced contentious disputes over financial budgets within the ruling coalition, particularly with the liberals, in 2023 and 2024. Macron's role as a right-leaning figure opposing the left's proposals on social welfare and pension reforms contrasts with Scholz and the Greens, who represented leftist approaches advocating for increased public spending. These leftist approaches stood in opposition to the liberals, who favored business-friendly policies focused on lower taxes and reduced public expenditure.
Secondly, the lingering effects of the COVID-19 pandemic during the early tenure of Scholz and his coalition, as well as Macron's second term, alongside the ongoing Russia-Ukraine war, continue to cast a shadow over European economies. Consequently, questions arise about the ability of the Franco-German axis to tackle upcoming challenges with Trump's return, especially given the continued political instability in Berlin and Paris, which is likely to persist at least through the first half of 2025.
Furthermore, both Germany and France face significant economic challenges, including high public debt, declining GDP, recession, and other pressing economic indicators, despite the differences in their respective economic policies.
Potential Implications
The political instability in Berlin and Paris raises several questions about crucial issues facing Europe. These include concerns regarding the current and expected economic performance in 2025, strategies for handling trade wars during Trump's second term, varying approaches toward China, and the European stance on scenarios for ending the war in Ukraine or Kyiv's need for increased military, financial, and humanitarian support. Compounding these challenges are the contrasting positions and actions of Scholz and Macron on these issues, as well as the time required for stabilizing governments in both countries and the subsequent impact on their foreign policies. The key considerations can be outlined as follows:
1. Divergent internal and external constraints:
Germany's snap elections are scheduled to take place within 60 days following Scholz's announcement of dissolving both chambers of parliament. The timeline implies a period between the no-confidence vote, held on December 16, and the official call for elections. Additionally, the anticipated duration for forming a governing coalition, based on historical precedents, will take no less than three months and sometimes exceeds six months.
Mid-December polls suggest the CDU, led by Friedrich Merz, could secure 31% of the vote, followed by the far-right Alternative for Germany (AfD) at 18%, the SPD led by Scholz at 17%, and the Greens at 13%. These figures propel the CDU leader closer to winning the chancellorship. However, forming a government solely led by the CDU seems difficult at this stage, assuming resistance from traditional parties (both right and left) to cooperate with the far-right.
In France, the new prime minister, François Bayrou, lacks sufficient support to remain in office until July 2025, the earliest date for calling another legislative election. During this interim period, Bayrou or another figure will manage daily affairs while attempting to pass at least the provisions of the 2024 budget until an agreement is reached on the 2025 budget. Although Macron retains flexibility in foreign policy, he faces hurdles in approving military spending and aid for Ukraine.
Meanwhile, Berlin, constrained by coalition politics and electoral campaigning, will likely approach defense and security policies with caution. The French constitution vests foreign and security policy powers in the president, granting Macron considerable scope for foreign action. However, his flexibility is limited regarding financial legislation related to military spending or support for Ukraine, which is likely to either cease or involve internal deals with the left or the National Rally.
Conversely, Berlin's actions are more restricted, as they require unified government and parliamentary approval. Additionally, political figures are preoccupied with promoting their election programs. As a result, foreign policy on defense and security issues, as well as the country's contribution to European funding, will become subjects of electoral debate in Germany.
2. Challenges to military spending and support for Ukraine:
Germany stands as the second-largest provider of military aid to Ukraine after the United States, leading European contributors with a contribution of 14.7 billion euros from January 24, 2022, to June 30, 2024. France's contribution during the same period amounts to around 4.44 billion euros, ranking ninth globally and fifth in Europe. Despite the significant gap between Berlin's and Paris's funding to Kyiv, Paris has criticized Scholz's stance on the war, particularly his approach to avoiding escalation against Russia and his reluctance to provide Kyiv with certain weapons, such as long-range cruise missiles like the "Taurus" system, or to send European troops to Ukraine.
Failure to approve the 2025 budgets for both Germany and France has left neither country currently able to direct additional military support to Ukraine. Scholz seeks to increase borrowing to fund infrastructure and send military aid to Ukraine, concerned about Trump potentially shifting the financial burden of the Ukrainian war onto European countries. Meanwhile, France cannot direct payments to Kyiv because its rejected 2025 budget discussed France's contribution to the European budget, which is expected to follow the formation of the European Commission and the preparation for discussions on the EU's multiannual budget.
Consequently, both Berlin and Paris must engage in European discussions to shape the course of military support to Ukraine. Moreover, Trump is expected to exert pressure on NATO countries to increase their military spending and shoulder greater burdens, both in the ongoing Ukrainian war and regarding the Atlantic defense system. Such pressure necessitates a unified vision from the German-French axis on the European defense system, which will become an even greater priority given the heightened threat from Russia under this American coercion.
3. Economic losses and crises:
The German model relied on a triad: security partnership with the United States, economic partnership with China, and low Russian energy prices. However, the 2022 Ukrainian war disrupted this balance, leading to a gradual abandonment of Russian energy and reliance on more expensive suppliers. Growing competition with China, fueled by protectionist policies and reciprocal trade wars, further strained the situation. These factors contributed to increased public debt, rising budget deficits, and a desire to impose a state of emergency in Berlin, alongside a decline in major industries such as automobiles.
Meanwhile, France faced its own economic challenges. The country's budget deficit exceeded 6.1%, surpassing the European Union's threshold of approximately 3%. Public debt reached 110% of GDP, and French bond markets were rated as having lower creditworthiness than Greece. Compounding these issues, the arrival of Trump brought plans to impose tariffs on European goods ranging from 10% to 20%.
Economic crises and political instability are expected in Germany and France, which together account for about 41% of the European Union's GDP. Consequently, making decisive and urgent decisions to face upcoming challenges will likely prove difficult. The German Economic Institute's predictions paint an even bleaker picture, estimating that the anticipated trade war between the United States under Trump's presidency and the European Union could cause losses of up to 134 billion euros to Germany's GDP by the end of Trump's term in 2028.
