Germany’s governing coalition has collapsed after Chancellor Olaf Scholz fired a key minister and said he would call a vote of confidence in his government early next year.

Scholz said he had no trust in Finance Minister Christian Lindner, who leads a rival party that has been part of the coalition along with Scholz’s Social Democrats and the Greens.

The move means Scholz’s government no longer has a majority in parliament. The confidence vote could lead to early elections by March.

The so-called “traffic light” coalition led by the chancellor has governed Germany since 2021.

But internal tensions had been bubbling for weeks before exploding into the open on Wednesday night.

Scholz said his former finance minister had “betrayed my confidence” and had put the interests of his party base over those of the country.

He added that Germany needed to show it could be relied upon by other countries, particularly following the election of Donald Trump in the US.

Lindner, who leads the FDP, accused Scholz of “leading Germany into a phase of uncertainty”.

The crisis inside the coalition plunged Europe’s largest economy into political chaos, hours after Trump’s election triggered deep uncertainty about the future of the continent’s economy and security.

When the coalition between the chancellor’s centre-left Social Democrats, the environmentalist Greens and economically liberal FDP was formed in 2021, each party planned to spend big on its own individual core interest groups.

However, Russia’s full-scale invasion of Ukraine in 2022 sent energy prices surging, and left Germany facing a increase in defence spending – and the cost of taking in 1.5 million Ukrainian refugees.

Germany is now facing its second year without economic growth.

Scholz and his Green partners want to tackle this by loosening constitutional rules on public debt to allow more spending. Lindner wants to pay for tax cuts by slashing welfare and social budgets and pushing back environmental targets.

Economy Minister Robert Habeck of the Greens said the party would not quit the government and that its ministers would remain in office.

Scholz announced that a vote of confidence would be held in Germany’s parliament, the Bundestag, on 15 January.

If MPs vote down the government, the country would hold fresh elections within weeks, instead of the scheduled date in September.

However, the opposition could force Scholz out earlier if they can find a majority for an alternative chancellor.

For now, Scholz will head a minority government comprised of his Social Democrats and the Greens – the second-largest party in the coalition.

Without a parliamentary majority, Scholz’s coalition will need to cobble together support for individual votes from other parties in order to pass laws and measures.

Scholz said he would ask Friedrich Merz – the leader of the opposition Christian Democratic Union (CDU) – for support in passing budgetary measures to help Germany’s ailing economy and boost military spending.

The departure of the FDP from the coalition also means that four other FDP ministers will leave their posts with Lindner – the ministers for justice, transport and education.

Scholz is expected to name a replacement for Lindner.