Germany was gearing up on Thursday for an early election after Chancellor Olaf Scholz pulled the plug on his ruling coalition.
Mr Scholz plans to hold a confidence vote in January, which his rump minority government is likely to lose, clearing the way for a general election in March. Opposition leader Friedrich Merz called on Thursday for the vote to be brought forward to next week.
The pro-business Free Democrats (FDP) also called for an earlier election after exiting Mr Scholz's three-party coalition. Party leader Christian Lindner was sacked as finance minister late on Wednesday after budget talks broke down, in what proved the final nail in the government's coffin.
President Frank-Walter Steinmeier indicated he would be willing to dissolve parliament, saying Germany "needs stable majorities and a government that is able to act". The head of state has the final say on whether to move forward the election, which was previously scheduled for September 2025.
He called on politicians to "live up to the scale of the challenges" amid voter concern over the future in Germany and the world, including after the US election. "The end of a coalition is not the end of the world. It is a political crisis that we must put behind us,” he said.
Formed in 2021, the first coalition between Mr Scholz's Social Democrats, the FDP and the Greens took power with an agenda to modernise Germany but has been beset by infighting and crises ranging from wars in Ukraine and the Middle East to illegal migration and a limp economy.
The final straw was a proposal by Mr Scholz suspend Germany's constitutional debt limit to avoid spending cuts while ensuring support for Ukraine, with all eyes on whether Kyiv's Nato allies will maintain their backing after Donald Trump's US election victory. The FDP refused to back more borrowing.
Mr Scholz wants to push through his economic policies before parliament is dissolved, relying on cobbled-together majorities in the Bundestag. Chancellery aide Joerg Kukies was appointed Finance Minister on Thursday as the government's collapse leaves the Social Democrats and Greens to hold the fort. Green Vice Chancellor Robert Habeck said the government was still functioning and was "firmly determined to fully fulfil the duties of office" until new elections are called.
Polls show all three ruling parties face a scathing verdict from voters, with Mr Merz's opposition Christian Democrats favoured to win the next election. Mr Merz said the government "lacked the strength" to revive Germany's economy. He said Germany could not afford months of limbo until a new government is formed.
"There is absolutely no reason to wait until January for the confidence vote. The coalition has no majority any more," Mr Merz said as he called for an election in the second half of January. "It is important that we very quickly return responsibility to the voters."
The chancellor's plan is for a confidence vote on January 15. If he loses, Mr Steinmeier will have three weeks to dissolve parliament, followed by an election within 60 days. "We need a government that is able to act, that has the strength to make the necessary decisions for our country," Mr Scholz told reporters.
Scholz accuses finance minister of blocking legislation
Mr Scholz said he fired Mr Lindner for his obstructive behaviour on budget disputes, accusing him of putting party before country and blocking legislation on spurious grounds. It comes with Europe rushing to form a united response on issues ranging from possible new US tariffs to Mr Trump's foreign policy.
Mr Lindner was focused on the short-term survival of his own party, Mr Scholz said. "Especially today, one day after such an important event as the US elections, this kind of selfishness is utterly incomprehensible," he said.
Speaking after Mr Scholz, Mr Lindner said the chancellor had tried to force him to break a constitutionally enshrined spending limit known as the debt brake, a move that Mr Lindner, a fiscal hawk, refused to support.
"Olaf Scholz refuses to recognise that our country needs a new economic model," he told reporters. "Olaf Scholz has showed he doesn't have the strength to give his country a new boost."
The SPD and the Greens, while at odds on some issues, agree that targeted government spending is needed.
Government at odds on how to rescue the economy
Germany's next government will have to tackle a flatlining economy, ageing infrastructure and rising support for the anti-immigrant Alternative for Germany (AfD) amid anger over illegal migration and extremism. With France also facing political uncertainty after snap elections this year, turmoil in the EU's two largest economies could hamper efforts to deepen the bloc's integration.
However, the collapse of the government could also be a blessing given the tensions within it, said ING economist Carsten Brzeski. "Elections and a new government could and should end the current paralysis of an entire country and offer new and clear policy guidance and certainty," he said.
The coalition has been at odds over how best to rescue Europe's largest economy, which is facing its second year of contraction and a crisis in its economic model after the end of cheap gas from Russia since its 2022 invasion of Ukraine, and amid increasing competition from China.
Mr Scholz said he had proposed capping energy costs for companies to bolster Germany's appeal as a place to do business. He wanted a package to help save jobs in the ailing motor industry, as well as increased support for Ukraine.
The FDP had proposed public spending cuts, lower taxes and less regulation as the answer to the malaise. It also wants to slow Germany's shift to a carbon-neutral economy.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The drill
Recharge as needed, says Mat Dryden: “We try to make it a rule that every two to three months, even if it’s for four days, we get away, get some time together, recharge, refresh.” The couple take an hour a day to check into their businesses and that’s it.
Stick to the schedule, says Mike Addo: “We have an entire wall known as ‘The Lab,’ covered with colour-coded Post-it notes dedicated to our joint weekly planner, content board, marketing strategy, trends, ideas and upcoming meetings.”
Be a team, suggests Addo: “When training together, you have to trust in each other’s abilities. Otherwise working out together very quickly becomes one person training the other.”
Pull your weight, says Thuymi Do: “To do what we do, there definitely can be no lazy member of the team.”
Top financial tips for graduates
Araminta Robertson, of the Financially Mint blog, shares her financial advice for university leavers:
1. Build digital or technical skills: After graduation, people can find it extremely hard to find jobs. From programming to digital marketing, your early twenties are for building skills. Future employers will want people with tech skills.
2. Side hustle: At 16, I lived in a village and started teaching online, as well as doing work as a virtual assistant and marketer. There are six skills you can use online: translation; teaching; programming; digital marketing; design and writing. If you master two, you’ll always be able to make money.
3. Networking: Knowing how to make connections is extremely useful. Use LinkedIn to find people who have the job you want, connect and ask to meet for coffee. Ask how they did it and if they know anyone who can help you. I secured quite a few clients this way.
4. Pay yourself first: The minute you receive any income, put about 15 per cent aside into a savings account you won’t touch, to go towards your emergency fund or to start investing. I do 20 per cent. It helped me start saving immediately.
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
The specs
Engine: 5.2-litre twin-turbo V12
Transmission: eight-speed automatic
Power: 715bhp
Torque: 900Nm
Price: Dh1,289,376
On sale: now
