(Bloomberg) -- German Chancellor Olaf Scholz vowed to seek a second term in national elections next year despite fading support for his coalition and persistent economic woes.
Poor polls are motivation to do better, the Social Democrat told reporters on Wednesday, rejecting suggestions that he might follow US President Joe Biden’s lead and refrain from running for a new term.
Scholz said he expects his record including raising the minimum wage, avoiding energy shortages and supporting Ukraine’s efforts to fend off Russia to support his reelection campaign.
“We’ve made the right decisions in uncertain and dangerous times,” the 66-year-old said in Berlin, speaking at a press conference that German chancellors traditionally hold before the summer break. “We must continue on the path of cohesion, and I hope that we will succeed in convincing everyone.”
Scholz’s three-party coalition has been mired in conflict almost since assuming power in December 2021. A budget crisis — triggered by Germany’s top court striking down key funding tools last year — dealt another blow to public perception and tightened spending constraints just as Europe’s largest economy struggles to resume growth.
The strains have eroded support for the coalition, with less than one in three voters backing the ruling parties. The SPD slumped to a record low in last month’s European Parliament elections, sowing doubts within Scholz’s own party about whether he’s the right candidate to lead the 2025 election. Only a third of SPD party members still support his candidacy, according to a Forsa poll.
Scholz pushed back and said that his party is united behind him. “We are all determined to go into the next general election and determined to win,” he said.
The alliance avoided the threat of collapse over the 2025 budget earlier this month. A last-minute deal deal was reached only after drawn-out negotiations between Scholz, Vice Chancellor Robert Habeck from the Greens and Finance Minister Christian Lindner from the FDP.
The agreement includes measures intended to boost growth and investment. Companies will be allowed additional tax write-offs, while the government will create incentives for people to work longer. The package was approved by cabinet on Wednesday. Habeck has said the measures could add 0.5 percentage points to Germany’s rate of expansion.
Hopes of a pickup in the second half of this year were undermined as Germany’s private sector unexpectedly contracted in July and the manufacturing malaise worsened. S&P Global’s Purchasing Manager Index fell to 48.7 from 50.4 in the previous month, worse than any of the estimates in a Bloomberg survey.
The next test for the coalition will come in September, when three states in former communist eastern Germany vote for regional governments, including SPD-led Brandenburg. The far-right Alternative for Germany is leading in all three states, and another poor performance by the ruling parties could further weaken the coalition a year before federal elections.
Scholz had repeatedly voiced support for Biden and expressed optimism that he would beat Donald Trump. On Wednesday, he said it is “very possible” that Kamala Harris, the presumed candidate from the Democrats, will win the election in November, but said that maintaining good relations with the US would be important no matter what the outcome is.
“It is clear to me that we must maintain the transatlantic course, as we have done in the past,” he said. “This cannot depend on who is president of the United States.”
--With assistance from Alexander Weber and Zoe Schneeweiss.
(Adds additional comments from third paragraph. A previous version of this story corrected a reference to timing of state elections.)
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