German Election 2025: Poll numbers and next chancellor?

Key Elections for Germany and European Union

The Alternative for Germany (AfD) party, a hard-right nationalist group, is gaining significant political traction in Germany, potentially becoming the second-largest political force. This shift poses a challenge to Germany’s traditional liberal democratic values and its historical legacy. The AfD’s rise reflects broader European trends of increasing support for populist right-wing parties. Key issues such as migration, economic struggles, military inadequacies, and infrastructure problems contribute to the current political climate. Despite these challenges, the AfD is unlikely to enter the government due to Germany’s coalition-building system and historical safeguards against far-right governance.

Since the AfD have an ‘anti-woke,’ pro oil and gas, strong anti-migration message, JD Vance and the Trump administration has shown support for the party. Recently, Elon Musk also supported them on social media. JD Vance, the US vice-president, did this during the recent Munich Security Conference to the shock of most Europeans.

Expected Result: the CDU Party led by Friedrich Merz is polling first and is expected to win. However, the AfD led by Alice Weidel looks to come in second. Merz recently used support by the AfD to pass a migration bill in parliament. The unwritten rule in German politics is not to work with the far-right AfD. Currently, CDU/CSU is polling at about 30% with AfD at 20 to 21%. The current party, SPD led by Olaf Scholz, is at about 15 to 16%, with thee Greens slightly less. The surprise is the Left party which seems to have jumped over the 5% level to get into parliament and is now polling about 7 to 8%.

Thus, even though the CDU is expected to win, the market should watch the coalition that forms. We should keep in mind that the CDU is strongly fiscal conservative and in a Bloomberg news flash today, Merz stated that taxes will not be raised.

Germany has a debt brake or constraint that new debt cannot be exceed 0.35% of GDP. This policy was enacted after the 2008 to 2009 financial crisis. What might break this policy is the fact that Europe is facing pressure from the US to spend more and contribute more on defense. The US and most European allies are frustrated with the state of the German military. Even today and after the announcement to spend $100 Billion by Scholz in the past, the German military is less capable than it was three years ago. This might be because Germany has sent the most military aid to Ukraine after the US contribution.

It should be noted that Germany became exposed to Russia through cheap energy, heavy dependence on exports to China and weak defense spending to overreliance on the US defense umbrella. This all happened under the 16 years during which Angela Merkel was in charge. On the energy front, liquid natural gas from the US, Norway and others has replaced Russian gas. However, this is more expensive and has led to many manufacturing firms in German struggling leading to layoffs and the rise of extremist parties.

Key Points

• AfD’s Rise: The AfD may become Germany’s second-largest political force, challenging traditional liberal values.
• Political Climate: Issues like migration, economic sluggishness, military weakness, and crumbling infrastructure influence the political landscape.
• Coalition Dynamics: Germany’s political system prevents single-party dominance, maintaining a cross-party consensus to exclude far-right parties from government. The Left party looks to win enough support to enter parliament.
• Broader European Context: The AfD’s growth mirrors the rise of populist right parties across Europe.
• Debt and Fiscal Spending: will the new CDU coalition break the debt constraint of 0.35 of GDP and open up to a European-wide fiscal loosening of the rules?
• AfD Foreign Policy: a reconciliation with Russia and cutting aid to Ukraine are goals. The AfD gets lots of support from East Germany, where cheap energy and business with Russia were disrupted with sanctions on Russia.

Historical Context and Concerns around the AfD

The rise of the AfD is particularly concerning for many Germans due to the country’s history with far-right extremism, notably the Nazi era. Post-World War II, Germany has been committed to ensuring that its political landscape remains democratic and inclusive, implementing various safeguards to prevent the resurgence of extremist ideologies. The AfD’s increasing popularity, however, indicates a shift in public sentiment and highlights existing societal divisions.

Public Sentiments and Driving Factors

Several factors contribute to the AfD’s growing support:

Migration Concerns: The influx of refugees and migrants has been a contentious issue, with some citizens feeling that their resources and cultural identity are under threat.

Economic Challenges: Despite Germany’s strong economy on a global scale, internal economic disparities and stagnation in certain industries have led to dissatisfaction among the populace.

Security and Defense: Perceived weaknesses in Germany’s military capabilities and defense strategies have fueled nationalist sentiments.

Cultural Identity: A portion of the population feels alienated by what they perceive as the erosion of traditional German values and culture in favor of multiculturalism.

Political Implications

While the AfD’s rise demonstrates a shift in voter preferences, it also complicates coalition politics. Traditional parties have to navigate these changes carefully, balancing between addressing legitimate voter concerns and resisting extremist influences.  For now, Germany’s coalition system acts as a buffer against the AfD gaining direct governmental power. However, their increasing influence can still impact policy decisions and national discourse, pushing traditional parties to adopt tougher stances on issues like immigration and national security.

There is also a growing fear among traditional parties and the public that extremist parties are gaining grown in Europe.  For example, the far-right in France and potential Reform party in the UK.  

European Perspective

The AfD’s growth is part of a broader European trend where populist and nationalist parties are gaining traction. This trend poses a challenge to the European Union’s principles of unity and diversity. Countries across Europe are grappling with similar issues—economic inequality, migration, and questions of national sovereignty—which are often exploited by populist movements.

Conclusion

Germany stands at a crossroads where it must address the underlying issues that fuel the rise of far-right populism while safeguarding its democratic values. The coming years will be crucial in determining whether traditional parties can successfully adapt to changing voter dynamics while maintaining Germany’s commitment to liberal democracy.