New Berlin coalition to prioritise affordable housing and greener industry

Germany moves a step closer to post-Merkel era as new coalition deal agreed in late-night talks

Germany’s likely coalition government moved one step closer to power on Wednesday after its future members agreed a programme for government that flags affordable housing and a green industrial transformation as urgent political priorities.

After a final late-night negotiation push on Wednesday morning, chancellor hopeful Olaf Scholz and his centre-left Social Democratic Party (SPD) struck an agreement with the Green Party and liberal Free Democratic Party (FDP).

The untested three-way coalition, dubbed “traffic light” after its members’ party colours, promises to “improve people’s lives in a concrete way and offer security at a time of change”.

“The traffic light is here,” said Mr Scholz to journalists in Berlin, promising progressive reform of Germany’s industrial landscape, renewal of the welfare state and embrace of more ambitious climate protection. “We are not interested in a politics of the smallest common denominator but politics with the biggest effect.”


The programme for government flags “affordable housing as the social question of our time” and promises “massive” investment in renewal energy. Europe’s largest economy will be retooled, according to the plan, so “the climate-friendly solution is always the more simple one – for our firms as well as for everyday life of our citizens”.

Other priorities will boost child allowance and stabilise pensions, while pushing the digitalisation of the largely analogue public administration.

If their programme is backed by their respective parties, Mr Scholz will be sworn in as post-war Germany’s 10th chancellor – along with his new cabinet – in the first week of December. That would leave outgoing leader Angela Merkel just days short of overtaking Helmut Kohl to become modern Germany’s longest-serving leader.

Balancing act

The programme for government reflects a delicate balancing act for the would-be partners, a taste of things to come given their diverse ideological perspectives.

Mr Scholz’s SPD, as largest coalition partner, takes the chancellery as well as ministries for the interior, defence, housing, labour and social affairs, health and economic co-operation. The liberal, pro-business FDP secured the finance ministry for its leader, Christian Lindner, as well as justice, transport and education.

In his first remarks, Mr Lindner insisted his party was signing up to a “government of the centre” and that, post-pandemic, he would serve as an “advocate for solid finances”. That is reflected in a coalition promise to return Germany to strict spending rules requiring parliament to back balanced budgets.

The coalition plans to legalise the recreational use of cannabis in licensed stores, a demand of the Green Party, which takes the foreign ministry, as well as economics/climate, family, agriculture/environment.

Green leftists and climate groups attacked the programme’s promise to phase out coal “ideally” by 2030 – eight years early – as a sell-out.

Green co-leader Robert Habeck insisted the programme was a document of “courage of confidence” that will reveal its climate-friendly potential over time. But a senior Green negotiator conceded it was a “disaster” for the party.

“The majority of the rank-and-file will back it,” the official told The Irish Times, “but it won’t be an amazing result.”

Derek Scally

Derek Scally

Derek Scally is an Irish Times journalist based in Berlin