(Bloomberg) -- German Chancellor Olaf Scholz is coming under mounting pressure to agree to an early election in January, with a new poll showing two-thirds of voters want a national ballot as soon as possible and business groups calling for an end to political turmoil.
The survey for public broadcaster ARD gives fresh ammunition to center-right opposition leader Friedrich Merz, who accused Scholz of seeking to delay the election until March purely for party political advantage.
Merz, who heads the poll-leading CDU/CSU alliance, said the Social Democrat chancellor’s tactics are “irresponsible” given that Europe’s biggest economy urgently needs additional measures to restore meaningful growth. The opposition is ready to discuss cooperation in parliament in coming weeks but only if Scholz submits as soon as possible to a confidence vote, Merz said Friday in an interview with Deutschlandfunk radio.
“We believe that German voters have the right to a stable parliament and, above all, to a stable government,” he said.
Speaking to reporters in Budapest where he’s attending the informal European Union summit, Scholz didn’t address the crisis paralyzing domestic politics back in Berlin.
The chancellor ended his three-party ruling coalition with the Greens and fiscally conservative Free Democrats late Wednesday when he sacked FDP Finance Minister Christian Lindner, forfeiting the alliance’s majority in the lower house of parliament.
Bunds sold off after Scholz removed Lindner, who is widely regarded as a figurehead for fiscal conservatism, pushing the 10-year yield to 2.50% for the first time since July. Those losses eased Friday after China announced measures to support its economy.
Another closely-watched gauge of angst about bond supply rose, with the 10-year yield climbing above the equivalent swap rate for the first time on record. The move accelerated a long-standing trend that has been fueled by higher net supply as the European Central Bank reduces its bond holdings and Germany’s economy stagnates.
“I think you’ll get some incremental changes,” Goldman Sachs Chief European Economist Jari Stehn said in a Bloomberg TV interview with Anna Edwards on Friday. “I certainly think it’s an opportunity after the policy gridlock that we’ve seen.”
Scholz said he wants the next election — which is scheduled for the end of September — to be held in March to give time to secure parliamentary approval for several planned bills.
But to get enough votes in the Bundestag he’ll need the backing of opposition lawmakers, and both Merz and Lindner have insisted that the election must be held as soon as possible.
That raises the prospect of a prolonged period of stagnation, a situation Germany can ill afford given the scale of the challenges facing its sluggish economy.
Scholz’s plan is to trigger a national ballot by deliberately losing a Jan. 15 confidence vote and asking the president to dissolve parliament. The election would then have to be held within 60 days.
German industry lobbies have echoed the calls for a swift election, arguing that the country badly needs political stability given the current geopolitical upheaval.
“Instead of guiding our country through these difficult seas, the chancellor is giving up the wheel,” Dirk Jandura, president of the BGA lobby that represents Germany’s key export sector, said in an emailed statement.
“Every additional day with this government is a day lost,” he added.
Scholz is also coming under pressure from within his own party to pave the way for a vote as soon as possible. “We need quick snap elections, in order to get a government that is able to act,” the SPD Wirtschaftsforum, a group of business-friendly Social Democrats, said in an email statement on Friday.
While the statement doesn’t explicitly criticize Scholz, it made clear that his decision to postpone a ballot until possibly the end of March would harm the German economy. “What is not being decided now and comes into effect at the beginning of 2025, will come much too late or not at all anymore,” according to the statement. “We cannot afford this.”
Merz’s center-right alliance is leading in opinion polls with more than 30% of the vote, putting it in prime position to win back the chancellery after it lost to Scholz’s SPD party three years ago.
Backing for the SPD is at about 16% in third place, behind the far-right Alternative for Germany in second with around 17%. The Greens are at about 11% in fourth, while a new far-left party — the Alliance Sahra Wagenknecht — is fifth with roughly 8%.
The FDP is polling as low as 3%, down from 11.5% in the 2021 election, putting it in danger of missing the 5% threshold for getting into parliament.
An Infratest Dimap poll for ARD, published late Thursday, showed that 65% of the 1,065 voters surveyed want the election to be held in January. Just under 60% indicated they welcome the demise of Scholz’s coalition.
--With assistance from Alice Gledhill and Anna Edwards.
(Updates with markets in seventh paragraph, comments from Goldman Sachs economist in the ninth.)
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