The Alternative for Germany (AfD) party won the election in the eastern German state of Saxony-Anhalt by a significant margin. While the reasons for the party's popularity are still under discussion among politicians and analysts, economists have raised alarms about the implications of the election results.
The outcome aligned with predictions, as the AfD, which is regarded as far-right extremist by some, secured the election and may now nominate the state’s minister-president, potentially taking control of the state government. In contrast, the governing Christian Democratic Union (CDU) has seen its strength diminish significantly, with other parties trailing behind. Some commentators describe the AfD's victory as a pivotal moment in Germany's postwar history.
Commerzbank economist Ralph Solveen stated, "A state government led by the AfD would certainly be seen by many as a turning point and would further fuel the debate over how best to deal with the party." He advised caution, noting that the economic impact of such decisions may not be felt until the medium to long term, as many economic policies are determined at the federal level. He indicated that the AfD's promises may not translate into actionable policies due to its likely isolation in the Bundesrat.
Concerns from the business community had already been expressed prior to the election, highlighting internal divisions within the AfD that could lead to unpredictable policies. For instance, Hannes Loth, a member of the AfD and mayor of Raguhn-Jessnitz, proposed the installation of six new wind turbines, which contradicts the party's official stance.
The AfD campaigned on limiting immigration, but experts like Michael Berlemann from the Hamburg Institute of International Economics expressed skepticism about the party's ability to implement such measures at the state level, as many immigration policies fall under federal jurisdiction. He noted that some proposed measures could be deemed illegal and overturned by the courts.
Carsten Brzeski, chief economist at ING, pointed out the national shortage of skilled workers, suggesting that while forced deportations may be limited, the symbolic implications of the AfD's stance could deter foreign skilled workers. Wido Geis-Thöne from the German Economic Institute echoed this sentiment, stating that the AfD's migration policies could make Saxony-Anhalt less attractive to skilled workers.
Berlemann highlighted the potential indirect effects of the AfD's proposals, warning that they could exacerbate the skilled labor shortage in critical sectors such as healthcare, hospitality, and construction. Ralf Wintergerst, president of Bitkom, emphasized the importance of Saxony-Anhalt being a welcoming environment for talent and investment, stating that the digital economy relies on openness and diversity.
Regarding foreign investment, Brzeski noted that while there could be a symbolic effect, Saxony-Anhalt does not represent the entirety of the German economy. DIW President Marcel Fratzscher painted a concerning picture of the state's economic future, suggesting that a weak or controversial government could lead to increased outmigration of people and businesses, worsening conditions in Saxony-Anhalt.
Fratzscher characterized the election result as a vote of no confidence in the federal government, calling for significant structural reforms. Tanja Gönner, managing director of the Federation of German Industries (BDI), echoed this sentiment, urging the federal government to pursue a reform agenda without delay. She stressed the need for a focus on competitiveness and growth at both state and federal levels, asserting that the results of a single state election should not divert attention from these goals.