08 December 2021

FT: The challenges facing Olaf Scholz’s new German government

The new German government being sworn in on Wednesday amounts to an unprecedented political experiment. The three coalition parties — Social Democrats, Greens and liberal Free Democrats — have never governed together before.

 And a host of urgent issues, not least a sharp escalation of the coronavirus pandemic, could subject their alliance to immediate strain.

How they cope with the challenges outlined below will shape history’s verdict on their coalition. 1. Overcoming coronavirus Olaf Scholz’s cabinet takes power with Germany in the grip of a fourth Covid-19 wave that has dwarfed previous surges. Infection rates are soaring and hospitals reaching the limits of their capacity.

Faced with an inoculation rate that is far lower than in countries such as Spain, Denmark and Belgium, the new chancellor has advocated mandatory vaccinations for all. But even those willing to get a jab face hurdles: lengthy queues form every day outside vaccination centres and doctors’ practices have complained of a shortage of shots. Meanwhile, social tensions are growing: last week anti-lockdown protesters held a torch parade outside the home of a regional health minister, a protest widely condemned by politicians in Berlin.

Karl Lauterbach, the SPD health minister, will be in charge of fighting Germany’s worst public health emergency since the second world war. Nicknamed the “prophet of doom”, Lauterbach has been a ubiquitous presence on German TV talk shows since the pandemic began, warning repeatedly of the dangers of Covid and advocating tough measures to halt its spread. That made him a hate figure to Germany’s many coronavirus deniers and anti-vaxxers. The trained epidemiologist, who has been head of Cologne university’s Institute of Health Economics and Clinical Epidemiology since 2008, is also mistrusted by many in his party, who say he is not a team player.

In the end, though, Scholz yielded to pressure from the public and a passionate Twitter campaign built around the hashtag “#WirwollenKarl” — We want Karl. 2. A sputtering economy Scholz faces a much grimmer economic outlook than when his SPD narrowly won the election in September. Data released on Monday showed a far larger slump in factory orders than analysts had predicted. Industry has been plagued by shortages of raw materials and products such as microchips, which have led to delivery bottlenecks and production problems in the automobile industry. 

Meanwhile, inflation hit 6 per cent last month, its highest level since the early 1990s. Experts now believe Germany could take longer to return to pre-pandemic levels of economic growth than the eurozone overall. Business groups also fear that tough new restrictions on the unvaccinated, introduced last month, could suppress consumer activity in the run-up to Christmas. Olaf Scholz Olaf Scholz has spent a big chunk of his long career preparing himself for Germany’s top job....

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