After the AfD election victory in Saxony-Anhalt, employers are warning about the economic consequences of the election outcome. “A climate of isolation is poison for the location,” said Steffen Kampeter, general manager of the Confederation of German Employers’ Associations, to the dpa news agency.
“No election result makes wrong economic policy right,” said Kampeter. "Germany needs open markets, international skilled workers, investments and a reliable Europe. Anyone who questions the euro and the European Union and seeks proximity to Russia is acting against the interests of companies and employees."
Skilled workers could leave
Economist Joachim Ragnitz from the ifo Institute Dresden fears that such a high election result for the AfD could be a deterrent to the urgently needed skilled workers. This could lead to an exodus of qualified workers - or it could become more difficult for companies to recruit staff. “This also has negative consequences for companies that might want to settle here: if they have to worry that they won’t get any workers,” Ragnitz told tagesschau24.
In addition, the question now arises as to how stable a government in Saxony-Anhalt can still be. Instability is “poison for investors,” said Ragnitz. “This election result and the resulting uncertainty will likely have negative effects.”
Populist parties as a locational disadvantage in the East?
Given the strength of populist parties, Ifo President Clemens Fuest spoke of the danger of economic decline in East Germany. “In the eastern German states, parties like BSW, Left and AfD currently have majorities,” Fuest told Capital magazine. "Governments against them are no longer possible. That is a location disadvantage." However, in a democracy, voters “also have the right to choose economic decline.”
Fuest predicted declining corporate investment in regions where populist parties pursue economically unreasonable policies. "If there is a high risk that parties will come to government in a region that create poor conditions for entrepreneurial activity, then investments will decline," said the Ifo President.
"Sound you don't want to have"
Moritz Krämer, chief economist at the Landesbank Baden-Württemberg, pointed to the signal effect abroad that a party classified as firmly right-wing extremist could now come to power in a federal state for the first time since the end of the Second World War. "Of course, this has a certain ring to it, especially for foreign investors in Saxony-Anhalt, which they don't want to have," comments Moritz Krämer.
The general manager of the BDI industry association, Tanja Gönner, called on the federal government to be more zealous for reforms after the state elections. “The answer to this state election result must not be a political standstill in the federal government,” Gönner told the Germany editorial network. Right now it is important that the federal government resolutely implements and expands a reform agenda for more investment, innovation and growth.
Call for reform
Marcel Fratzscher, President of the German Institute for Economic Research, also assumes that Saxony-Anhalt's economic prospects have worsened. “Regardless of the next government constellation, a controversial or weak state government and the polarization in the election campaign are likely to accelerate the migration of people and companies from Saxony-Anhalt and thus significantly worsen the situation in the state,” said the economist.
The federal government must now change course and implement “deep, structural reforms in subsidies, bureaucracy, taxes, the social system and Europe”. "We urgently need change in Germany with reforms that go many times further than the Agenda 2010 reforms 25 years ago. Failure will make it more likely that the AfD will win an absolute majority in 2029."
The general manager of the chemical association VCI, Wolfgang Große Entrup, warned on the LinkedIn platform that the German economy thrives “on democracy, the rule of law, Europe and open markets”. "And export-oriented sectors such as chemicals and pharmaceuticals even more so. Anyone who tears down these four pillars will endanger Germany's prosperity and its industrial substance." The chemical industry is an important sector for Saxony-Anhalt - a federal state that is heavily characterized by small and medium-sized companies.
