German Chancellor Olaf Scholz has warned that a failure to strike a budget agreement this week could force the country toward early elections, after talks with coalition partners stalled over spending cuts. The warning adds fresh pressure to an already strained governing alliance as officials try to close the gap on fiscal policy.

According to Reuters, negotiations between Scholz’s Social Democrats and the Greens have slowed over how deeply to trim spending. The dispute underscores the difficulty of balancing budget restraint with political commitments at a time of economic uncertainty and public frustration over government performance.

If no deal is reached soon, the coalition could face a sharper political crisis and increased instability in Europe’s largest economy. The standoff also raises questions about whether the current government can maintain enough unity to govern effectively through the coming months.

For now, the outcome depends on whether party leaders can bridge their differences before the deadline Scholz has set. If they cannot, Germany may be headed into a period of renewed electoral uncertainty and prolonged budget turmoil.