Germany: Impending Snap Elections Amidst Nationalist Surge

The recent political crisis in Germany has raised numerous concerns about the future of the European country. Elon Musk delivered an unforeseen address at the campaign launch for the Alternative for Germany (AfD) party in Germany. The event occurred during a period when thousands of individuals were congregating nationwide to protest the rise of the far-right political party.

While addressing the audience through a live video feed, Elon Musk was met with resounding cheers from approximately 4,500 supporters of the Alternative for Germany who had gathered in an auditorium in the city of Halle, located in eastern Germany. This marks his second public appearance in support of the contentious political party, which has elicited increased discourse regarding his burgeoning influence within European politics. Musk’s communication was unequivocal: he believes that the Alternative for Germany represents the “most promising prospect for Germany’s future.”

The audience reacted favourably to Musk’s remarks. However, his critics expressed discomfort, as they perceived his statements to align with the ideologies of the far right. In his address, he underscored the necessity for “greater self-determination for Germany” and expressed a desire for a reduction in the influence exerted by the authorities of the European Union. In the wake of the dissolution of Germany’s governing coalition, the Alternative for Germany party is eager to expedite progress as swiftly as possible from this juncture onward.

“Chancellor Scholz has significantly eroded the trust of the German populace, and it is imperative that he facilitates the initiation of a new election without delay,” stated Alice Weidel, co-chair of the far-right AfD, in response to the cabinet’s dissolution. “He must facilitate the conditions necessary for the conduct of such an election.”

What are the main predictions for the coming German elections? Although the AfD faces a surge in their followers, their heightened anti-liberal attitude and focus on the national value of Germany instill fear in the majority of the voters. However, it is also unlikely for the current SPD (social-democratic) party to remain in power as well. The emergence of Alternative für Deutschland was highlighted during the European elections held in Germany in June 2024. This far-right political party, founded in 2013, achieved a notable second-place result, securing 15.9% of the vote and obtaining 15 seats in the European Parliament, marking its highest electoral performance to date. The outcomes of the regional elections conducted in September 2024 in Saxony, Thuringia, and Brandenburg indicate that the Alternative for Germany continues to experience growth, having garnered approximately thirty percent of the vote. If the party continues to grow, its influence on German politics may drastically change the current market of the European Union.

The political ideology that the party seeks to implement is a free market economy with a social perspective, fundamentally grounded in the model proposed by Ludwig Erhard, a leader of the Christian Democratic Union, who established the foundations for Germany’s post-war reconstruction in 1948. The Alternative for Germany maintains a steadfast position regarding the constraints on the state’s role and seeks to diminish taxes, particularly those perceived by its supporters as progressive and as instruments of wealth redistribution. Also, should it attain power, the far-right Alternative for Germany has reiterated its intention to extricate Germany from both the European Union and the euro, the common currency. If the Alternative for Germany (AfD) ascended to power, enterprises, particularly those within the industrial and technical sectors, would likely capitalize on the advantages of deregulation and diminished corporate taxation. This would foster an environment conducive to the expansion of entrepreneurial ventures and the attraction of investments.

The German economy would encounter both opportunities and challenges if Germany decided to exit the European Union and the eurozone, as envisioned by the Alternative for Germany. On one hand, enterprises that rely on European Union trade agreements, subsidies, and uninterrupted cross-border activities may encounter challenges. There exists the potential for domestic enterprises to experience growth as a consequence of policies that emphasize national self-sufficiency. This may lead to an augmentation in the quantity of government contracts and incentives aimed at promoting local production. As Germany recalibrates its economic relationships, it is conceivable that enterprises specialising in infrastructure, defence, and energy sectors may uncover new opportunities.

It is plausible that the labour market may be influenced by the Alternative for Germany’s emphasis on nationalism and sovereignty, particularly if immigration regulations become increasingly stringent. There exists a potential for a transitory deficiency of personnel in essential sectors. Nevertheless, this situation may concurrently foster heightened investment and automation within industries such as manufacturing and logistics. Businesses will be required to adapt to an environment characterized by national economic strength, reduced regulatory frameworks, and the potential for a departure from European financial systems if Germany is governed by the Alternative for Germany (AfD). This political shift possesses the capacity to fundamentally alter Germany’s position within the global economy.

However, AfD, despite its recent surge in popularity, statistically is only the second most likely candidate to win. In the upcoming elections on February 23rd, the most probable victor are the CDU/CSU parties (Christian Democratic Union of Germany). They are conservative political parties in Germany, whose major agenda is central-right. CDU/CSU are often called the “Union”, since CSU is basically the Bavarian sister party of the CDU. A member of this particular party was the famous Angela Merkel, who from 2005 to 2021 was the Bundeschancellor of Germany. The CDU emphasizes the “Christian understanding of humanity and their obligation to God” while implementing the tenets of Christian democracy. Nonetheless, CDU membership consists of persons who identify with many faiths, as well as those who are non-religious. The CDU’s principles are founded on political Catholicism, Catholic social teaching, political Protestantism, economic liberalism, and national conservatism. The CDU supports the Bundeswehr’s participation in domestic anti-terrorism operations and the implementation of harsher sanctions for crimes. The CDU is dedicated to the assimilation of immigrants via language programs and enhanced immigration regulations. It asserts that dual citizenship should be allowed only in extraordinary situations. Also, the CDU is committed to fostering a strong partnership with the United States and integrating Europe into its foreign policy.

The CDU persists in promoting trade agreements with global partners. The CDU is willing to provide support to other member states for unemployment and economic recovery, contingent upon their compliance with the Stability and Growth Pact (SGP), as stated in the program. They assert that member states should not be obligated to share responsibility for loans and debt. Regarding single market reform, the CDU advocates for Germany and France to further expand the eurozone and align their corporate tax rates. If the Christian Democratic Union is elected as the next political leader in Germany, then the economy will be even more deeply engaged in the process of developing trade agreements between the European Union. Given that CDU is most likely to win the next election, European businesses can safely continue to invest their money in expansion in Germany.

The establishment of a coalition is a common occurrence in post-war Germany, as none of the parties can achieve an absolute majority. A recurrence of the “Grand Coalition” between the CDU and SPD (Social Democratic Party of Germany) is the most likely outcome, according to recent surveys. In theory, a majority could be achieved through a coalition between the CDU and the Greens. The “Grand Coalition” might potentially be augmented by the FDP (Free Democratic Party), whose party platform roughly corresponds with that of the Union. A consensus exists among parties, despite the fact that they hold differing perspectives: they collectively oppose governance with the AfD due to the party’s far-right ideologies and radical approach to politics.

The impending German elections provide businesses with significant prospects. Notwithstanding the dangers associated with an EU withdrawal, deregulation and tax reductions might possibly foster entrepreneurial development and attract investments if the AfD ascends to power. A CDU win will offer a stable climate for growth, further EU trade integration, and strong relationships. Both possibilities provide unique opportunities: the AfD’s nationalist ideas may invigorate local sectors, while the CDU’s pro-EU stance ensures stability and growth. Businesses must be ready to adapt, as Germany's political shift might reshape its economic destiny.