The German chancellor, Olaf Scholz, has defended his decision to oust his finance minister, which has led to the break up of his government, arguing that the survival of the alliance would have come at the expense of national stability and international security.

Scholz used his first speech to parliament since his “traffic light coalition” lost its majority to plead for national cohesion. He called on opposition parties to support his minority government in the months before early elections to prevent Germany from becoming as polarised as the US.

“The times in which we live are damned rough,” Scholz said.

“We live in one country. We are better off when we stick together – when we can still look each other in the eye even after an argument,” he said, adding “there is no democracy without compromises.”

He urged the opposition conservatives to support key legislative goals, which his administration still hopes to get through “for the good of the nation”.

But he received short sharp shrift from Friedrich Merz of the conservative CDU/CSU alliance, which is polling strongly enough to expect to lead the next government. Merz said he would only support Scholz in certain areas such as bolstering legal tools needed to fight the rise of populists. But he would not assist with his legislative programme until after a confidence vote planned for 16 December, because he did not trust him to stick to any promises he made before that.

Germany is expected to go to the polls on 23 February. More than 60 million people are eligible to vote.

Scholz suggested that it was his insistence on the continuation of Germany’s unremitting support for Ukraine that had been at the heart of the budget row that caused him and finance minister Christian Lindner to fall out so catastrophically.

Lindner’s refusal to relax Germany’s tight budget constraints and take on more debt at what Scholz argued was a time of national emergency meant that the dispute had effectively come down to playing off Ukraine against German pensioners.

“It cannot be and it should not be that support for Ukraine leads to cuts in German pensions,” Scholz said, adding that he had had no choice but to end the coalition, plunging Germany into political uncertainty.

Lindner has rejected Scholz’s version of events, accusing him of mischief-making. In his speech to parliament, Lindner, who is head of the pro-business FDP, called his dismissal a “liberation”. Jollied along by his own party colleagues and members of the opposition conservatives, he accused Scholz of “not talking about the same country” and of ignoring the concerns of ordinary Germans.

The outcome of the US election stood as a warning, as people had chosen Trump primarily because of economic concerns, he said.

“People sense that a society without growth is threatened by struggles over distribution,” he added.

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In a tense debate, which felt very much like the start of the election campaign, Merz, who has made no secret over years of his ambition to become chancellor, was unforgiving in his assessment of the government’s three years in power.

Merz said Germany needed a “fundamentally other type of politics”. He vehemently ruled out allying with the far-right populist AfD, whose members jeered and laughed as he spoke.

Alice Weidel, the AfD leader, gave a spitting rebuke of Scholz and his government as well as of Merz and his CDU/CSU, accusing them of being responsible for a series of policies that had brought Germany to a state of near economic collapse.

“This traffic light coalition is coming to an end in as undignified a manner as that in which it reigned,” she said, describing Merz as “nothing more than an ersatz Scholz”.

She presented the framework for a “future plan for Germany”, which the AfD would instigate if it came into power, including the mass deportation of illegal immigrants.

Foreign minister Annalena Baerbock said that when they went to the polls, German voters would have a chance to choose stability over insecurity, and to give their answer to “America First”.

“It can’t be ‘Germany First’,” she said. “In times of ever more instability,” she said, the need was for politicians in Germany and Europe to work together, to “protect that which unites us”.