Far-right gains in east Germany could deal blow to economy

Even though incumbent state premier Dietmar Woidke of the Social Democrats won the Brandenburg elections by a small margin, the Alternative for Germany (AfD) won just shy of 29.2% of the votes. That made the far-right party the second-strongest in the Brandenburgstate assembly behind the Social Democrats (SPD), who won 30.9%. 

The AfD, which Germany's constitutional court has classified as a "suspected far-right extremist organization," gained 5.7 percentage points more than in the elections five years ago. The party scored a similarly outstanding result two weeks ago in the two eastern states of Thuringia and Saxony, where it garnered 32.8% and 30.6%, respectively.

Many economists and business representatives are now concerned that Germany's right-wing shift in the east could negatively impact the economy of the former Communist East German region.

AfD's anti-migration stance deters qualified professionals

"Many skilled workers will likely migrate to western Germany or larger cities," said Marcel Fratzscher, president of the German Institute for Economic Research (DIW) in Berlin. "Brandenburg, like Saxony and Thuringia, stands to lose out because of this," he told DW ahead of the elections.

Germany is already grappling with a shortage of skilled workers that saw 570,000 jobs unfilled in 2023. While the shortage is slightly less severe in the eastern German states, the workforce there is aging more rapidly, with fewer young people workers available to replace them.

According to a survey conducted by the Munich, Germany-based ifo Institute, about 84% of the economists polled expect the AfD's successes in Thuringia and Saxony to have "negative or highly negative effects on the region's attractiveness to skilled labor."

DIW's Fratzscher says the rise of the AfD is reason for concern among both foreign workers and German nationals: "German businesses and skilled German workers also don't want to live in these regions in many cases."

Migrants rethink their lives in Germany

Especially workers with migration background are increasingly skeptical about life in Germany due to the popularity of the AfD. A nationwide survey conducted by the German Center for Integration and Migration Research (DeZIM) in March 2024 found that nearly one in ten people with a migration background is seriously considering leaving the country. Immigrants originating from the Middle East and North Africa seem to be particularly concerned as 18.9% said they are considering leaving Germany.

However, economist Alexander Kritikos from Potsdam University told DW that there has already been a net outflow of foreign skilled workers due to the "negative sentiment" toward foreigners. "This reaction started long before the recent state elections," said Kritikos.

To allay general fears of an exodus of qualified workers from eastern Germany, most economists DW contacted pointed out that the majority of eastern voters were still voting for democratic parties and wouldn't support the AfD. The region is still attractive enough to draw international investors, those economists said.

Brandenburg's economic upswing faces political risks

Brandenburg, the state surrounding Berlin, saw economic growth of 2.1% last year, the second-highest rate of all 16 federal states.

Carsten Brönstrup, spokesperson for the Berlin-Brandenburg Business Associations, hopes the upswing will not be interrupted because of the elections. "[US automaker] Tesla, of course, has made a big investment, which is a major success story. We believe Brandenburg will continue to benefit from electromobility as a long-term automotive trend."

Roland Sillmann, chief executive of state-run business promotion company WISTA, is less convinced that political risks are not emerging in Brandenburg. In an interview with DW, he recalled mounting business risks that accompanied an anti-foreigner movement in Saxony called Pegida a few years ago. "I received quite a few calls from startups in [Saxony's capital] Dresden that were thinking of moving to Berlin," he said. 

As public support for the AfD increases, the popularity of Germany's mainstream political parties is falling, leading to complex and drawn-out negotiations to form a government. This is further complicated by the emergence of another populist party, the left-wing Sarah Wagenknecht Alliance (BSW), named after party leader and former Left Party MP Sarah Wagenknecht, who could become a political kingmaker in the east.

Sillmann believes what Brandenburg now needs is political stability. "Brandenburg is undergoing a major structural shift in its economy, including a phaseout of coal production. Political continuity and swift decision-making are crucial now."

Brönstrup, for his part, is less worried about the future of the Brandenburg economy. He says that any new government in Potsdam just needs to take its responsibility seriously. "They must understand what's at stake," he said, because "for investors, long-term political stability is what matters."

Like in Saxony and Thuringia, Brandenburg's mainstream parties also have ruled out forming a coalition with the AfD. DIW's Fratzscher says it is now important that politics, civil society and businesses take a "stronger stand to show that Germany is a country of immigration."

This article was originally written in German.