Germany’s Political Crisis Was Long in the Making

Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

The crumbling of Germany’s governing coalition is in part the culmination of a 15-year-long competitiveness crisis during which the country’s largest companies moved over €650 billion outside its borders. Almost 40% of the outflow came since 2021, the year center-left leader Olaf Scholz became chancellor. Now, Donald Trump’s return risks causing even more capital to flee Germany’s ailing economy, as companies consider investing in the US to dodge his threatened tariffs. Against this backdrop, Scholz is rejecting opposition calls for a no-confidence vote next week, as he tries to stave off an election until March to give his party time to recover. But even as former Finance Minister Christian Lindner struggles to explain his sacking, Christian Democrat leader Friedrich Merz is already warming up to finally take power.