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German Economy and Climate Minister Robert Habeck, left, talks to German Chancellor Olaf Scholz, right, during a meeting of the German federal parliament, Bundestag, at the Reichstag building in Berlin, Germany, Thursday, Nov. 7, 20024. (Christophe Gateau/dpa via AP)

Germany's economy is in trouble. The government's collapse and Trump's return bring more risk

The collapse of Germany’s governing coalition and President-elect Donald Trump’s imminent return to the White House are creating new risks for the European Union's biggest economy

By VANESSA GERA and COLLEEN BARRY
Published - Nov 07, 2024, 12:44 PM ET
Last Updated - Dec 16, 2024, 05:35 PM EST

WARSAW, Poland (AP) — The collapse of Germany's governing coalition and President-elect Donald Trump's imminent return to the White House are creating new risks for the European Union's biggest economy, already in a troubling decline.

Germany's economy has been shrinking for the past two years in the wake of the coronavirus pandemic, war in Ukraine and competition from China. Amid both structural problems at home and global challenges, Chancellor Olaf Scholz's fractious three-party coalition failed to find a way forward on some key issues.

The situation came to a head Wednesday night when Scholz announced he was firing Finance Minister Christian Lindner. The move effectively meant the collapse of the chancellor's coalition, which relied on Lindner’s pro-business Free Democratic Party, and left the government bereft of a parliamentary majority.

The coalition's breakdown followed weeks of internal disputes over how to boost Germany's ailing economy.

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