Germany is experiencing significant political volatility and industrial pressure driven by sustained high energy costs, leading to gains for populist parties like the AfD. Promises to produce more useless tanks are not cutting it.
The far-right Alternative for Germany (AfD) party is leveraging severe industrial anxieties and rising energy costs to build significant political momentum. High electricity rates and structural economic pressures have heavily strained Germany’s automotive and chemical manufacturing sectors, transforming worker anxiety into potent political leverage.
The Industrial Crisis and Political Fallout
Germany’s traditional manufacturing model—historically built on stable trade, engineering dominance, and affordable energy—has faced deep disruptions since the loss of cheap Russian gas imports. Energy-intensive businesses are facing falling industrial orders and rising corporate insolvencies. This tension has been brought to a head by major restructuring at iconic institutions like Volkswagen, which approved four domestic factory closures and announced tens of thousands of job cuts to manage severe cost disadvantages.
Populist leaders, including federal spokesperson Tino Chrupalla and co-leader Alice Weidel, have directly blamed the current coalition government’s energy transition and foreign policies for the structural decline. They point to corporate departures to the U.S. and China as evidence of a failing domestic policy.
Upcoming State Elections as a Litmus Test
The political impact of this economic anxiety is highly visible in upcoming regional elections, particularly in eastern states like Saxony-Anhalt, where the AfD has surged ahead in opinion polling.
The party’s campaign heavily capitalizes on these industrial vulnerabilities:
• Energy Policy: Demanding an immediate end to CO2 taxes, a return to traditional nuclear power, and the restoration of Russian natural gas via old pipelines.
• Industrial Support: Pledging to eliminate subsidies for electric vehicles (EVs) and return focus entirely to internal combustion engines.
• Social Spending: Proposing free daycare, school lunches, and local government funding boosts specifically prioritized for German citizens.
Divergent Economic Warnings
While the AfD promises a swift "economic boom," economists and business leaders strongly warn that the party’s platform could worsen Germany’s structural challenges.
Perspective Core Arguments & Proposals Economic Risks Cited by Experts
AfD Platform • Halt the renewable energy transition
• Resume fossil fuel imports from Russia
• Implement strict anti-immigration policies • Accelerates the critical shortage of skilled labor via anti-immigrant rhetoric.
• Risks isolation from key EU markets.
Mainstream Economists & Industry Groups • Maintain EU single-market integration
• Accelerate targeted green energy independence
• Introduce strategic trade measures via Brussels • Estimates by the German Institute for Economic Research suggest AfD isolationist policies could trigger a deep growth shock, risking thousands of jobs.
The deep polarization reflects growing public discontent regarding how the costs of the energy transition have been distributed, raising the stakes for Germany's political stability and industrial future.
“The far-right party Alternative for Germany, or AfD, is set to make a major breakthrough.
Saxony-Anhalt, a former East German state of around two million people, is relatively small. But the significance of the election there on Sunday could be seismic. The AfD is on track to win overwhelmingly and perhaps even secure an overall majority, which would mean that it could form a state government for the first time in its history. Long confined to the opposition, the AfD now stands on the cusp of wielding power — regionally, at least.
The rise of the AfD has already made coherent and stable government difficult at the national level. Its success in last year’s federal election, in which it came in second, with 20 percent of the vote, forced the center-right Christian Democrats to form a government with the center-left Social Democrats.
The two parties have squabbled since Friedrich Merz became chancellor, and the AfD has surged in the polls. Now it is by far the most popular party in Germany.
What makes the AfD’s rise especially shocking is that it is much more extreme than other European far-right parties that are either already in power, like Giorgia Meloni’s Brothers of Italy, or could be soon, like Marine Le Pen’s National Rally. Whereas those parties have sought in some ways to detoxify and moderate themselves, the AfD has become more radical over time, deepening its ties to neo-Nazis and promising to repatriate migrants. As it has done so, it has grown more popular.
Last year, Germany’s domestic intelligence agency classified the party as “right-wing extremist.” But the scale of the party’s support means it is too late to ban it.
Instead, it has fallen to Mr. Merz’s government to stop it. Yet preoccupied with remilitarization and foreign policy, it is seemingly incapable of doing so.
For Germany — and the rest of Europe — the implications are truly alarming.
At the heart of the matter is the economy, which is going through a deep structural crisis. Over the past two decades, the German economy was often described as Europe’s strongest. In reality, its extreme dependence on exports made it quite fragile. This fragility has now caught up with it: Germany’s manufacturing industry, the basis of its economic success, is being hit by a combination of American tariffs and Chinese competition — what is often referred to as China Shock 2.0. This economic decline underpins the AfD’s recent surge in support.
The AfD actually began with economic issues. It was created in 2013 as a direct response to Angela Merkel’s insistence that there was no alternative to bailing out Greece — hence its name — and was originally a party of fiscal hawks who opposed a redistributive European Union. After the refugee crisis in 2015, it repositioned itself as an anti-immigration, anti-Islam party; two years later it got into the Bundestag, leading some to imagine that it had become focused only on cultural issues. But alongside xenophobes and nativists, fiscal hawks retained a home in the AfD.
Central to their concerns was maintaining the so-called debt brake, a constitutional amendment that limited government borrowing. During his 2025 campaign, Mr. Merz promised to keep it, even as it prevented much-needed investment. But after the Christian Democrats won the election, he reached an agreement with the Social Democrats and the Greens before the new Parliament had been formed to amend the constitution, exempting military spending from the brake. This democratically dubious move alienated many right-wing voters. It was around this point that the AfD overtook the Christian Democrats in the polls for the first time.
Mr. Merz didn’t dismantle the debt brake entirely. That would have made it possible to begin to solve some of Germany’s problems. Instead, as nonmilitary spending remains subject to the debt brake, Mr. Merz has continued to cut back the welfare state and told Germans that they need to work harder so that the economy can regain its “competitiveness.” This approach — increasing military spending while cutting elsewhere — may appeal to foreign policy analysts, but it is politically disastrous. A significant part of the AfD’s appeal lies in its focus on job losses and declining prospects.
Germany’s remilitarization has also been disastrous in another way. Since 2022, centrist parties in Germany have largely abandoned their commitment to the idea of Germany as a “Friedensmacht,” or force for peace, and now speak more about preparing for a full-scale war with Russia. Mr. Merz, for his part, says he wants Germany to possess “the strongest conventional army in Europe.” This has allowed the AfD to present itself as the party of peace — not unlike the way that President Trump positioned himself in opposition to the “forever wars” undertaken by American Democrats and Republicans alike.
The increase in military spending has caused some to wonder whether Germany could become “Europe’s next hegemon.” But that is a fantasy. For one thing, it is far from clear that Germany’s spending plans will translate into real military capabilities, to say nothing of reviving the economy. For another, Germany is increasingly isolated within the European Union, not least because of its unconditional support for Israel and willingness to block any measures against it, like suspending the European Union’s association agreement with it. Perhaps most important, there is little support for military power, let alone war, among German voters.
When Mr. Merz was running to be chancellor, he promised to reduce the AfD’s popularity — chiefly by taking tougher measures against immigration, including what in the coalition agreement was called a “deportation offensive.” Then, on the night of the election, he declared that his “absolute priority will be to strengthen Europe as quickly as possible so that, step by step, we can really achieve independence from the U.S.A.,” producing much excitement among supporters of greater European autonomy. A year and a half in, both objectives remain further away than ever.
Two more regional elections later this month are likely to produce further advances for the AfD, deepening the sense of national crisis. Some Christian Democrats, in a panic, are already speculating about Mr. Merz’s future. Yet what the country needs is not a different chancellor but a completely different approach. Until then, the AfD will continue to inch closer to power.
Hans Kundnani is a visiting professor at the London School of Economics and the author of “Eurowhiteness: Culture, Empire and Race in the European Project.”” [1]
1. Something Alarming Is About to Happen in Germany: Guest Essay. Kundnani, Hans. New York Times (Online) New York Times Company. Sep 4, 2026.
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