Scholz will hold a vote of confidence in parliament on December 16, a source told the news agency, referring to a move that is expected to pave the way to the snap vote.

The February election date is a compromise between the conservative opposition, which wanted a vote in January for fear of leaving Germany rudderless at a time of economic and diplomatic crisis, and Scholz, who wanted a mid-March election to give authorities and parties more time to prepare.

Inflation, Russia's invasion of Ukraine, intensifying competition from China and U.S. President-elect Donald Trump's return have combined to create a perfect storm for Germany, whose economy, Europe's largest, prospered from abundant energy, and a benign, pro-trade international political environment.

Reflecting that, the ZEW institute's investor morale index collapsed on Tuesday to 7.4 points, from 13.1 points in October, a much sharper drop than analysts had expected.

"The outcome of the U.S. presidential election is likely to be the main reason for this," said ZEW President Achim Wambach.

A government with a clear majority would be better able to broach topics like Germany's debt brake, blamed by many economists for the country's low investment rate, or to make money available for strategic industries.

Friedrich Merz, leader of the Christian Democrats and favorite under current polls to become chancellor, has so far ruled out scrapping the debt brake. On Tuesday, he promised a major tax reform.

"It is important that we get new elections as soon as possible," Carsten Linnemann, general secretary of Merz's Christian Democrats, told public TV before the date became known.

The December 16 vote, at which parliament will express its lack of confidence in Scholz, is the trigger that will allow President Frank-Walter Steinmeier to call new elections.

Scholz, who for now runs a minority government with the backing of the Greens, hopes to secure enough opposition support to pass laws to protect the Constitutional Court from the far-right and to boost funding for Ukraine before leaving office.

His government collapsed after months of wrangling between the two remaining parties and their erstwhile coalition partner, the neoliberal Free Democrats, who demanded spending cuts on a scale their left-wing partners were unwilling to countenance.

Merz's conservatives have a wide lead in the polls, but in an era of high voter volatility, both the SPD and the Greens are insisting, at least publicly, they can recover enough ground over the coming three months to pip Merz at the post.