Germany will hold a snap election on 23 February after an agreement reached on Tuesday morning by parliamentary factions from the leading Social Democrats and the main conservative opposition CDU/CSU.

The German president, Frank-Walter Steinmeier, gave the go-ahead for the new election schedule at a meeting of representatives of the government and the leading opposition in Berlin on Tuesday evening.

Steinmeier said in a statement issued by his office that “based on a current assessment” he “considered February 23 as a realistic date for new elections”.

The statement followed a meeting between Steinmeier, who is head of state, the CDU leader Friedrich Merz and Rolf Mutzenich, parliamentary group leader of the SPD.

Also present were two members of the Greens.

It is hoped it will bring clarity after days of infighting and speculation prompted by the collapse of Germany’s three-way coalition government last week.

The government fell after the chancellor, Olaf Scholz, of the Social Democrats, fired his finance minister, Christian Lindner, of the pro-business FDP, in a months-long row over how to fill a multibillion euro hole in the national budget. The FDP in turn withdrew from the coalition, depriving it of a parliamentary majority.

The election date is considered a compromise between the opposition conservatives, who had pushed for a January vote, arguing that Germany could not be left without leadership at a time of economic and diplomatic turmoil, and Scholz, who said a date in mid-March was necessary to give the election authorities time to organise the poll, in which more than 60 million people are eligible to vote.

Scholz is due to address parliament at Wednesday lunchtime. He is expected imminently to announce the date of a vote of confidence in the government, which his coalition is expected to lose, paving the way for elections. The vote could take place on 16 December.

Since the FDP’s withdrawal last week, Scholz’s centre-left Social Democrats (SPD) and the Greens – its other coalition partner – have carried on in a minority government.

Scholz, who wants to run again and has the backing of party leaders to do so despite dismal poll numbers, initially suggested an election in late March but came under pressure from the CDU as well as the Greens to speed up the process. The CDU is riding high in opinion polls and its leader, Friedrich Merz, has been pushing for an election as early as possible.

The political turmoil has hit as Europe’s biggest economy is expected to shrink for a second year in a row and amid heightened geopolitical volatility, with wars raging in Ukraine and the Middle East. The agreed poll date would mean Germany will be in the middle of its election campaign when Donald Trump is inaugurated as US president on 20 January.

The SPD, FDP and Greens had been governing together since 2021 – the first time that a tripartite coalition had been tried at a federal level in Germany.

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On Tuesday, the first polls since the collapse of the so-called traffic light coalition, showed that all parties, in particular the far-right populist AfD, had profited from the drama, except for the Social Democrats. The CDU/CSU conservative alliance under Merz is on 32.5%, the Greens are on 11.5% and the FDP is hanging on to the threshold needed for it to re-enter parliament, with 5%, while the SPD is polling at 15.5%.

The AfD, which has long called for new elections, has had the biggest gain, of 1.5%, which gives it 19.5% of the vote, second only to the CDU/CSU.

Election analysts put the AfD’s rise down not only to the fallout from the coalition collapse, but also to what is being referred to as the “Trump effect”. Its leader, Alice Weidel, has seen her position in the popularity ratings of Germany’s top 20 politicians rise from 17 to 14. Scholz is placed 19th out of 20.

The most popular German politician is the defence minister, Boris Pistorius, of the SPD, who is 20 percentage points ahead of Scholz in the polls. He has often been touted as a potential candidate for chancellor but is said to be reluctant to contemplate the role, publicly denying any ambition to do so. However, internally the SPD is said to be discussing how it might switch Scholz for Pistorius, even as much of the party is said to desire a period in opposition.

Merz, a 69-year-old lawyer and investment banker who is favourite to become the next chancellor, on Tuesday promised a swathe of tax reforms, including a reduction in VAT on all foodstuffs and restaurant meals.

The new government will be forced to confront the crises Germany finds itself facing, including inflation, Russia’s war on Ukraine and the threat of tariffs from both China and Trump. Its economy suffered a heavy blow after supplies of cheap Russian gas and oil were cut after Moscow launched its full-blown invasion of Ukraine and by the failure so far to agree on the sustainable management of debt at a time of crisis.