Scholz fired: Germany calls snap election

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The Economist. Hello and welcome to the Intelligence from the Economist. I'm Jason Palmer.

And I'm Rosie Blore. Every weekday we provide a fresh perspective on the events shaping your world.

It's a story that's played out in lots of places. The richer India gets, the more trouble it has with its waste of all kinds. Our trash talking correspondent visits one of a couple of cities that have, against the odds, managed to clear the mess.

And Fortnum and Mason is one of Britain's iconic brands with its signature blue green packaging. Our correspondent visits the famous food hall to find out how it's succeeding. While competitors struggle. But first. Angela Merkel was Chancellor of Germany for 16 years. Her successor, Olaf Scholz is set to last just over three.

Nicht er reicht ich werde den Bundes Presidenten und vers zuglichters e gebnester Abstemung.

Midtime Yesterday, Scholz lost a confidence vote in the German parliament. His position was already untenable. Last month the dysfunctional three party coalition he headed fell apart, leaving his Social Democrats at the helm of a minority government. Though Scholz will remain in office until a new government is formed, the once stable Germany now faces a snap election.

The events yesterday were predictable. We knew that Olaf Scholz was going to lose this vote of confidence in the Bundestag.

Tom Nuttall is our Berlin bureau chief.

But they were also dramatic. This is only the sixth time in Germany's post war history that a vote of confidence has been held in the Chancellors. So this was a historic moment. That leads us to towards early election in February.

So you say this was expected, but remind me how we got here.

Last month at the start of November, what was then a three party coalition led by Mr. Schultz collapsed after months of infighting. Olaf Scholz sacked his finance Minister Christian Lindner. Mr. Lindner's party, the Free Democrats, then left the government. That left Mr. Schultz in charge of a minority coalition with his Social Democrats and the Green Party. Minority Government unable to get anything done, anything through Parliament, it was necessary to hold an early election. And Germany's constitution lays out the steps very clearly to get to that election. You hold a confidence vote. The Chancellor asks the President, the head of state, to dissolve parliament and hold an early election. And that's basically where we are now.

The three main parties are publishing their manifestos today. What do they stand for? What are their competing visions of Germany?

The opposition Christian Democrats and their Bavarian sister party. They are going to be led into this campaign by a man called Friedrich Metz, who, because the Conservatives are leading the opinion polls, he is likely to be the next Chancellor. And Friedrich Metz is a very different sort of character from Mr. Schultz. He has a fiery, spiky, rhetorical style, and that was on full display in the Bundestag yesterday. In his response to olaf Scholz's speech, Mr. Metz was very harsh about what he regards as Olaf Scholz's weakness in Europe. He said, it's embarrassing how you behave at the European level. You're an embarrassment to Germany. It's embarrassing to see how you behave in the European Union. And this kind of red meat is catnip to the cdu. CSU shot troops. We have a manifesto here that calls for tax cuts, corporate tax cuts, a much harsher line on migration, a somewhat more robust approach towards Ukraine than we've seen from the current government, a change in welfare rules. This is what we will see from the party today. I wouldn't say it's a particularly radical document, especially given that Germany is in somewhat of an economic funk right now. Mr. Schultz's Social Democrats, meanwhile, will call for a higher minimum wage for ensuring that there is no raising of the retirement age from 67, a protection of benefits and a sort of a general kind of safeguarding of the social and welfare state that the Social Democrats stand for. So fairly traditional stuff. A lot of people think that these two parties are likely to form a coalition, what we call a grand coalition in Germany after the election. And I don't see a lot in their respective programs that would make that necessarily very difficult. But one thing to bear in mind in German politics is that these manifestos, you can kind of regard them as an opening gambit because after the election there will be a coalition, probably another two party coalition, and the negotiations will take these manifestos at starting points for what will then be a detailed platform for government, a coalition agreement. That is the thing that matters, not these manifestos that are basically campaign platforms rather than governing programmes.

And you mentioned the economic funk Germany's economy hasn't really grown for six years. Do any of the parties have a firm plan to fix that?

In contrast to previous years, Germany, there is a shared agreement amongst all of the mainstream parties that something has gone quite seriously wrong with the German model. One of the key issues, I think, in this campaign is going to be over the so called debt break. Some listeners may be familiar with this. It's a slightly unusual element of the German constitution, which severely curtails the federal government's ability to run budget deficits. The spd, as well as the Green Party, which is also releasing its programme today, want to relax some of the provisions of that rule so that Germany can run larger deficits, to invest particularly in its infrastructure as well as in defence, because there's now a commitment on all sides to meet the NATO obligation to spend 2% of GDP on defence. The Christian Democrats, by contrast, are retaining a commitment to the debt break in their manifesto. But Friedrich Metz, in interviews, has hinted that he will be ready in coalition discussions to consider relaxing the debt break under certain circumstances. That's going to be one of the key issues after the election in those negotiations, I think.

And there's another possible curveball in all of this. By the time Germany votes in February, Trump will have been in office for a few weeks. What impact is he likely to have?

I think that this is absolutely crucial and it's why I think a lot of the talk at the moment, it has a bit of a feeling of a phony war, because my feeling is that when Germans come to vote on February 23rd, they're not really going to be thinking about the things that Olaf Scholz and Friedrich Merz were discussing in the Bundestag yesterday. They are likely to be thinking about whatever it is that emanates from Washington in those first few weeks of the Trump administration. I think that there's two things to watch carefully. One is that Mr. Trump's administration has threatened to slap tariffs of 10 to 20% on exports from the EU. Germany, of course, is a big export country and there are all sorts of estimates doing the rounds about the potential effects on German gdp. Those tariffs. America has become Germany's biggest trading partner. It's overtaken China. So there's a lot at stake here. The second thing to watch is Ukraine. There's all sorts of speculation about some deal that the Trump administration could pursue with Volodymyr Zelenskyy and Vladimir Putin. But what's at stake for Germany, which is the biggest supplier of military aid to Ukraine after the Americans, is Two things. I think if there is some sort of deal with a ceasefire line in place, then the Americans are likely to ask the Europe to provide troops to monitor that ceasefire line. That's going to be extremely difficult for Germany to countenance. In fact, Olaf Scholz explicitly ruled it out in the Bundestag yesterday. And the second part of that is what sort of security guarantees Ukraine could be offered in the event of some sort of ceasefire. The Ukrainians want NATO membership. I think that's going to be a very, very difficult ask for the Americans, for the Germans and for others. So are there bilateral security guarantees that the Germans might be prepared to offer? So while I think in January, when the campaign heats up, we see a return to these traditional issues, the economy, fiscal policy, welfare policy, once Trump has taken office, that could spring a February surprise in Germany's election campaign. And it's those sorts of questions that may be front of mind for German voters when they go to the polls on February 23rd.

Tom, we will definitely be speaking in the early weeks of 2025. Thank you so much.

Look forward to it. Thanks, Rosie.

Couple of weeks ago, I went to Goa to do some reporting. Look, I know it's a dirty job, but someone's got to do it. Now, when I say it's a dirty job, I don't mean that actually literally, because the reason I went to Goa was to see how clean it was.

Leo Mehrani is an Asia correspondent for the Economist and is based in Mumbai, which he insists on calling Bombay.

See, about 20 years ago, PanJam, that's the capital of Goa, used to be filthy, just like every other Indian city. I traveled around this country quite a bit. I live in Bombay. Horrible. Panjam was just like this. There were some 1500 community waste bins where people could bring their rubbish. They were all overflowing. It was wet and dry, mixed. It was extremely unsanitary, to say nothing of unsightly and malodorous. Then the stuff from there was taken by the municipality to a dump near a village outside Panjin, and it grew into a mountain. And then eventually in 2005, during the monsoon, this trash heap collapsed and sent refuse into people's homes and water bodies and whatnot. The villagers, unsurprisingly, were revolted, although unsurprisingly, the villagers revolted. The site was closed and Banjam could not find anyone else to take its rubbish. As a result, today, 20 years on, because of a lot of effort that they've put in and new systems that they put in place and going on and on and on about telling citizens how to do things. Today, Panjim is one of the cleanest cities in India.

So if you say that kind of everywhere else in India has not got this message, then surely Panjim is a good example for them.

It is absolutely a good example. It's one of several smaller cities that have done this. I mean, most famously, there's a town in the middle of India called Indore which keeps topping the rankings of India's cleanest cities. There are several small places that have done this, but the problem is that most places have not, especially the big cities like Bombay, where I live, just covered in filth. Right. Most of India is covered under a stroud of plastic bags and snack packets, bottles, human waste, food waste, all sorts of things. A fifth of the population has no waste collection whatsoever in the cities, most of which have some at least rudimentary waste collection. Like a lot of that stuff is just dumped, some of it is burnt in the open, which contributes substantially to India's bad air quality as well. This problem is only going to get worse. In 2021, urban India generated about 50 million tonnes of solid waste in the whole year. By 2031, that's likely to be two and a half times as much, 125 million tonnes.

And presumably that is more than just unsightly, as you put it, and malodorous, in fact.

Yeah. So here's the problem. In the countryside, or let's say outside of cities, just as we saw in Goa. What happens is, I won't go too deep into the rather gross details, but there's something called leachates which get into the soil, contaminate the groundwater, plastics and other things. They clog up water bodies. Also these things in cities and elsewhere, they attract vermin, they attract flies, they attract rats. The rats, incidentally, then attract snakes. It's a problem that causes a cascading number of problems after that. Also, what's happened, especially in the past few years, is this explosion of E commerce. It comes in cardboard. Inside the cardboard is a box. There's some plastic around it somewhere or the other. Even as India gets richer, a section of urban India is consuming more.

But are city leaders, are India's government doing anything about it? It's part of the growing pains that a lot of other countries have experienced.

Absolutely. And India, especially the national government under Narendra Modi, to its considerable credit, has taken this seriously from day one. Very soon after he came to office, Narendra Modi launched something called SWACHH Bharat, which means Clean India. Swachh Bharat Mission, the Clean India Mission, that first one was focused on largely on building toilets and making India free of open defecation. With some success, I should say. In 2021, they launched Swachh Bharat 2.0. Very sexy. And this one's goal is to make all Indian cities garbage free. And what that means is incentivizing certain things, offering funds to help with those things. So the central government alone has earmarked about $4.3 billion for this effort, with a lot more expected to come from states. That's one thing. Also in 2016, a couple of years after entering office, Mr. Modi's government framed national rules for the management of solid waste and extended it beyond the coverage that existing quite feeble rules covered. So they are certainly trying. It's a long project. You need to keep doing it day after day. You need to keep reminding people. You need to keep upping the stakes. You cannot just say, okay, I've done this, now it's done. Then the filth will rise again. Just like in your house. Jason. Never been to your house.

I'm like famously a tidy freak. So it's all well and good to have catchy names for programs and to throw money into them, but what are they actually doing here to fix the problem?

It's not a complicated solution. It is difficult to actually implement and change the behavior of hundreds of millions of people, but it's not complicated. At the heart of making cities filth free is you need segregation from the producers of waste. So just as you do in your home and I do in my home, you segregate your wet waste, which is mostly food waste, and your dry waste. That's how GOA started. Then you move on. You make it a bit more complicated. Today, certain parts of PanJam have 16 different categories of segregation, apart from the wet waste. Now, it's not enough to just require this stuff. You have to educate people. You have to explain to people why it's important rather than just enforce it or mandate it. What Goa does is they focus exclusively on school kids age 4 to 9 or thereabouts on the basis that they can both drive change at home as well as will carry these lessons as they become adults. You can also do other little things, right? You could have. One day is for collection of plastics. One day is for collection of food waste. One day is for collection of paper. Your bin collectors should turn up on time. They should turn up predictably. So there's a bunch of Very, very important, but small sounding things that have to be done. And it's not just down to citizens. A lot of this requires effort from government, from politicians, from bureaucrats.

So you've laid out really quite a lot of things that need to be addressed. What's the biggie here? Is it the politics? Is it the education? Is it the sort of will at the local level?

It's all of those things and more. What it comes down to is something I keep running into in piece after piece about India's urban hills, which is that India's cities do not really have all that much power. And unless India succeeds, something it's been trying to do for 30 years succeeds in giving its cities more power, urban ills are going to remain a function of Indian cities. Full stop.

Leo, thanks very much for your time.

Thank you, Jason, for having me. As ever.

I'm standing outside Fortnum and Mason on Piccadilly, just admiring the Christmas windows, something I come to see every year. There's a stream of visitors here already and it's barely 10am It's a long queue to get inside the store.

Vinjeru Nkandawere is a Britain correspondent for the Economy Economist.

Walking through Piccadilly, you can't miss it. The illuminated facade. It's lit up at night to look like an Advent calendar. And Fortnum's is so popular at a time when a lot of British retailers are struggling to get people to walk through their doors. Fortnum's attracting crowds. Let's take a look inside. Wow, it is busy in here. Fortnum and Mason stands out against other retailers who are short on festive cheer. From BHS to debitums. A tough environment has wiped out 4/5 of British department stores in eight years. The recent budget dealt the latest blow. Changes to national insurance contributions and a jump in the national living wage will raise Fortnum's costs by about 3 million pounds, equivalent to 2/5 of its pre tax profits last year. One of the ways that Fortnum stands stands out is its focus on food sales of which have largely remained offline across all stores. Fancy department stores with big apparel businesses such as Harvey Nichols and Liberty have struggled with the rise in online shopping. But Fortnum's eggs and other edible indulgences still draw people in. So I've heard there's a gin distillery on the third floor and I'm just walking over to have a look. Are these. Are these all of the different flavors that you use in the gin?

Yeah. So these are all the different botanicals that we put into our gin both our Manthea Dry and our Manthea Pink gin. Some of that there's like a mystique behind it. But, you know, we want to show customers that, you know, this is quite fun and quite interesting to process.

Fortnim's in store experiences have driven a lot of traffic. Last year it replaced its menswear section with a food hub, which hosts cooking demonstrations, supper clubs and even a gin distillery. The redesign is aimed mostly at its domestic shoppers, who account for 70% of sales. Tom Athron, Fortnum's CEO, says he wants to offer experiences you can't get online. Fewer Chinese tourists and the loss of VAT free shopping for overseas visitors haven't hurt much. Footfall at the flagship Piccadilly store is a fifth higher than before the pandemic. The store does look really Christmassy. It's got the red carpet out, there's a lady just boxing up some Turkish delight, and the dancing pine cones are descending as we speak. Portraying Fortnums as an accessible brand has also helped. Fortnums is hardly aimed at the frugal. Its priciest wicker hampers retail for around £6,000 and it will provide Christmas puddings for the royal household. But the price of items averages 12 pounds, so it caters to a broad range of shoppers. There's some shortbread, biscuits and checkered tins. Some tins decorated like the storefront.

Okay, thank you.

£9.95 for some earl Grey shortbread. So now we've got the family Christmas hamper in the famous Fortnum mason hamper. That's 14 items for 265 pounds. Lots of Christmas biscuits, Christmas pudding, some black tea, some Boxing Day pickle and some champagne. Love to get this as a gift for any of my family members listening. Supply chains are newer terrain for the 317 year old brand. Online orders have grown to over a third of sales, up from a tenth before the pandemic. Fortnum's has doubled its warehouse capacity in the uk. It's opened a new facility in the EU in Belgium this past year. It also plans to expand in America. But back on Piccadilly in London, the physical store attracts crowds. Foreign.

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