Since the 1970s, German chancellors have been re-elected at least once. Olaf Scholz is on course to become the first to be voted out of office after only a single truncated term. His three-party coalition between his own Social Democrats, the Greens, and the conservative-liberal FDP, collapsed over disagreements on economic policy earlier this month. Snap elections are scheduled for February.

The SPD’s fate should be a cautionary tale for Labour and other centre-left parties in Europe. Scholz’ victory in 2021 had quite a few parallels to Keir Starmer’s electoral triumph. After the 16-year long reign of long of Angela Merkel, the Germans wanted change. Like Labour, the SPD, too, promised an increase in public investment. In Germany, most of it went into renewable energies. But they soon reached the point when net zero regulations started to weigh on companies and consumers. The first big backlash came with the domestic heating bill, which forced homeowners to replace gas heaters with expensive heat pumps. This led to falling house prices in parts of the country.

Scholz’ coalition was also one of the biggest supporters of the EU’s Green deal, with its compulsory CO2 targets for car companies, the 2035 deadline for the end of the fuel-driven car, a nature restoration law that forces farmers to set aside land, and now an equally controversial de-forestation law. Together with legislation on corporate social responsibility, this led to a big increase in costs and bureaucracy for companies. The electoral pushback against Scholz and the Greens is the first popular revolt against net zero in Europe. It will not be the last one.

Serial and ongoing misjudgements in energy policy have played a big role in the German government’s collapse. During the first two decades this century, Germany made itself over-reliant on Russian gas. The SPD was the political party that invested the most into political relationship with Russia. This was also the time when Germany started to phase out nuclear power, a technology in which German scientists excelled, but which the public distrusted. The loss of Russian gas and nuclear energy has left the economy under-powered in the age of AI. It was only last year when Scholz prognosticated that the investments in the green transition would lead to growth rates Germany experience during the economic miracle years of the 1950 and 1960s. They really believed the fairy tale of limitless cheap green energy. The economic reality could not be more different.

When Christian Lindner, finance minister and chairman of the FDP, demanded an economic policy U-turn earlier this autumn, the coalition was headed for the brink. To prevent Lindner from quitting, Scholz decided to fire him and to end the coalition himself. But the timing was all wrong. It came on the day when Donald Trump was declared the winner of the US elections, not a great a moment for a political crisis of the EU’s largest country.

Then it got worse. German newspapers ran a relentless campaign to push the SPD into replacing Scholz with Boris Pistorius, the popular defence minister as its candidate for chancellor in the next elections. Former SPD leaders weighed in on the debate, some in favour of Scholz, some on the side of Pistorius. But just when a coup against Scholz appeared at least possible, Pistorius decided he would not run. The episode left Scholz, as a damaged candidate of a damaged party.

It’s not over yet. Scholz was a poor chancellor, but I would not underestimate him as a campaigner. His caution on weapons deliveries for Ukraine resonates with many voters. He flatly rejects the delivery of German-made Taurus cruise missiles, the one missile system that would have could have given Ukraine an opportunity to regain the upper hand in the war if they had been delivered much earlier. If Trump were to impose a peace deal between Russia and Ukraine, I would expect Scholz to claim some of the credit. Trump’s inauguration a month before the German elections adds an element of unpredictability. But for Scholz to swing this around would be a come-back of a scale larger than what Gerhard Schröder managed in 2005. Schröder still lost the elections that year by a narrow margin. Of all conceivable outcomes, a moderate-to-strong rebound is the best the SPD can realistically hope for. But it can also go the other way.

Irrespective of the result, the SPD might still end up in government as a junior coalition partner just as it did under Merkel. It is a story of the complex arithmetic in an electoral system of proportional represenatation. Since all of Germany’s centrist parties have erected political firewalls against a resurgent far-right Alternative for Germany, they have left themselves in a position where they can only govern in coalitions with each other. On present polling, Friedrich Merz, the CDU leader, is most likely to become the next chancellor. But to govern, he would need to form a coalition, most likely with either with the SPD or with the Greens. I am even sure that the SPD is playing for victory. It looks like they are playing for second place.

And then what?

A grand coalition would be no easier to manage than the one that just collapsed. Merz would face similar problems than Scholz.

In the meantime, the decline of German industry continues unrelentingly. Week after week, we hear reports of redundancies and factory closures in the car industry and its suppliers. This is what happens when a country with an outdated technology hits the net zero economy amid geopolitical conflict.

The German-British sociologist Ralf Dahrendorf famously called the 20th century the social democratic century. It did not end with the Cold War. In Germany, it went into extra-time. But it is ending now.