Germany's coalition collapses dramatically. Scholz plans to lead with a minority government

BERLIN (AP) — Germany’s government coalition has collapsed in dramatic fashion after Chancellor Olaf Scholz fired Finance Minister Christian Lindner of the pro-business Free Democrats in a late-night move following a marathon of crisis meetings.

The three remaining ministers of the Free Democrats resigned in response, leading to the downfall of the government coalition. Scholz is expected to lead the country with a minority government, but the opposition is calling for an immediate no-confidence vote.

But early Thursday, Transport Minister Volker Wissing from the Free Democrats unexpectedly took back last night's resignation and told reporters that after talking to Scholz, he had decided to stay on as minister and leave the party instead.

Lindner will receive his certificate of dismissal from President Frank-Walter Steinmeier on Thursday afternoon and, to ensure a smooth transition, a successor will likely be named right after. The posts of the research and justice ministers who resigned may also be filled Thursday, German news agency dpa reported.

Scholz announced late Wednesday that he would seek a vote of confidence on Jan. 15 that he said might lead to an early election as soon as March — which otherwise would have been be due next September.

Scholz had accused Lindner of breaching his trust and publicly calling for a fundamentally different economic policy, including what the chancellor said would be tax cuts worth billions for a few top earners while at the same time cutting pensions for all retirees.

“That is not decent,” Scholz said.

Scholz's left-leaning Social Democrats will now effectively lead a minority government with the remaining coalition partner, the environmentalist Greens.

The chancellor announced late Wednesday that he would reach out to the leader of the biggest opposition leader in parliament, Friedrich Merz from the center-right Christian Democrats, to confer on possible ways of strengthening the economy and defense, and passing important legislation through parliament.

But Merz on Thursday vehemently rejected Scholz's plan to wait to hold a vote of confidence until January.

“The coalition no longer has a majority in the German Bundestag, and we therefore call on the chancellor (...) to call a vote of confidence immediately, or at the latest by the beginning of next week.”

“We simply cannot afford to have a government without a majority in Germany for several months now, and then campaign for several more months, and then possibly conduct coalition negotiations for several weeks," Merz added.

He said he was planning to meet with Scholz later Thursday to push for a quick vote of confidence.

Since Scholz's government doesn't have a majority in parliament any longer, he would likely lose the vote. In that scenario, Germany's president could dissolve parliament within 21 days and an early election could then be held as soon as January.

“During these 21 days, we will have enough time to find out whether there are any issues that we may have to decide on together,” Merz said, offering his party's cooperation with the minority government. "We are, of course, prepared to hold talks (..) we are also prepared to take responsibility for our country.”

Indeed, pushing through new legislation and plugging the billion-euro hole in the 2025 budget won’t become easier for Scholz’s Social Democrats and the Greens as their government no longer has a majority in parliament. But Scholz has said his government needed that time to pass important legislation.

Achim Wambach from the Leibniz Center for European Economic Research cast doubt that a prolonged period with a minority government would help Germany's economy get back on track.

“Germany’s problems are too big to tolerate political gridlock," the analyst said.

“The government set out to reconcile the transformation towards climate neutrality with economic growth and social security,” the analyst said in a statement. “It has not lived up to this claim. The economy is stagnating and investments are failing to materialize.”

“This daunting task was compounded by geo-economic tensions: wars in Europe and the Middle East as well as economically damaging interventions through tariffs and national subsidy policies,” he added. “ The election of Donald Trump has exacerbated these problems. Europe must do more for its security and will have to reckon with increased tariffs.”

The collapse of the coalition came after weeks of disputes among the coalition partners over ways to boost the country’s ailing economy.

Lindner's pro-business Free Democrats had rejected tax increases or changes to Germany’s strict self-imposed limits on running up debt. Scholz’s Social Democrats and the Greens wanted to see major state investment and rejected the Free Democrats’ proposals to cut welfare programs.

German Chancellor Olaf Scholz speaks to participants at the Deutsche Telekom AG forum, in Berlin, Thursday, Nov. 7, 2024. (Carsten Koall/dpa via AP)

German Chancellor Olaf Scholz speaks to participants at the Deutsche Telekom AG forum, in Berlin, Thursday, Nov. 7, 2024. (Carsten Koall/dpa via AP)

German Chancellor Olaf Scholz speaks to participants at the Deutsche Telekom AG forum, in Berlin, Thursday, Nov. 7, 2024. (Carsten Koall/dpa via AP)

German Chancellor Olaf Scholz speaks to participants at the Deutsche Telekom AG forum, in Berlin, Thursday, Nov. 7, 2024. (Carsten Koall/dpa via AP)

Federal Minister of Finance Christian Lindner, from left, joins Bijan Djir-Sarai, Free Democratic Party Secretary General, and Christian Dürr, Chairman of the Free Democratic Party parliamentary group, for a press statement after his dismissal by the Federal Chancellor Olaf Scholz, in Berlin, Wednesday, Nov. 6, 2024. (Christoph Soeder/dpa via AP)

Parts of the Reichstag building with the Bundestag and the Paul Löbe House in Berlin's government district are reflected in the Spree at night, early Thursday, Nov. 7, 2024. (Kay Nietfeld/dpa via AP)

Federal Minister of Finance Christian Lindner, right, gets into his limousine in front of the Reichstag building after his dismissal by the Federal Chancellor Olaf Scholz and a parliamentary group meeting in Berlin, Wednesday, Nov. 6, 2024. (Christoph Soeder/dpa via AP)

Federal Minister of Finance Christian Lindner makes a press statement following his dismissal by the Federal Chancellor in Berlin, Wednesday Nov. 6, 2024. (Kay Nietfeld/dpa via AP)

Federal Minister of Finance Christian Lindner makes a press statement following his dismissal by the Federal Chancellor in Berlin, Wednesday Nov. 6, 2024. (Kay Nietfeld/dpa via AP)

German Chancellor Olaf Scholz gives a statement after a meeting with government leaders in Berlin, Germany, Wednesday, Nov. 6, 2024. (AP Photo/Markus Schreiber)

Germany's Federal Chancellor Olaf Scholz speaks in Berlin, Wednesday Nov. 6, 2024. (Michael Kappeler/dpa via AP)

German Chancellor Olaf Scholz leaves a statement after a meeting with government leaders in Berlin, Germany, Wednesday, Nov. 6, 2024. (AP Photo/Markus Schreiber)

TOKYO (AP) — Nissan reported Thursday a loss for the latest fiscal quarter as its vehicle sales sank while costs and inventory ballooned, prompting the Japanese automaker to slash 9,000 jobs.

Chief Executive Makoto Uchida said he was taking a 50% pay cut to take responsibility for the dismal results, while promising that a turnaround was coming.

Nissan Motor Corp. announced a global workforce reduction of 9,000 people, or about 6% of its more than 133,000 employees, as well as a plan to slash global production capacity by 20%.

Uchida declined to say which regions will be affected by the cuts or give specifics.

For the latest quarter through September, Nissan racked up a 9.3 billion yen ($60 million) loss, a reversal from the 190.7 billion yen profit recorded the same quarter a year ago.

Quarterly sales fell to 2.9 trillion yen ($19 billion) from 3.1 trillion yen.

Uchida acknowledged Nissan didn’t respond quickly or flexibly enough to global changes, including market tastes and soaring raw material costs.

“I take this situation very seriously,” he told reporters. “Nissan will restructure its business to become leaner and more resilient.”

Nissan models did not sell well in the U.S., one of the most lucrative auto markets in the world that's recently been dominated by Ford, Toyota and Tesla.

All aspects of Nissan’s operations and plans will be under review, Uchida said.

Nissan, based in the port city of Yokohama, reported fiscal first half sales revenue of 5.98 trillion yen ($39 billion), edging down 1% from the more than 6 trillion yen the same period last year.

Its April to September profit totaled 19.2 billion yen ($124 million), declining sharply from the 296.2 billion yen earned over the six months last year.

Nissan lowered its sales revenue forecast for the fiscal year through March 2025 to 12.7 trillion yen ($82 billion) from an earlier projection for 14 trillion yen ($91 billion).

It did not give a net profit forecast, citing uncertainty. It promised to give a profit forecast as soon as possible. Earlier, Nissan was forecasting an annual profit of 300 billion yen ($1.9 billion).

Nissan now expects to sell 3.4 million vehicles around the world in the fiscal year ending in March 2025, down from an earlier projected 3.65 million vehicles. The new number is about the same that Nissan sold last fiscal year.

Nissan said it’s appointing a chief performance officer tasked with turnaround decision-making, who will begin his job next month.

No dividends will be paid out, given the harsh results.

Yuri Kageyama is on X: https://x.com/yurikageyama

FILE - Logos at a Nissan showroom are seen in Ginza shopping district in Tokyo, on March 31, 2023. (AP Photo/Eugene Hoshiko, File)