What will be the AfD effect on East German industry (and beyond)
Economists' opinions and analyzes on the consequences of the AfD results for eastern Germany and the rest of the country.
More than the far right, the German economic world now fears stalemate, paralysis in the formation of regional governments in the Länder of Thuringia and Saxony, where the vote was held last Sunday. And he looks with apprehension at what could happen in three weeks in Brandenburg, when the third election of this difficult autumn political recovery takes place. There is also concern that this month's votes are only an appetizer of what could happen in a year's time, when we vote for the federal elections: the prospect of a French syndrome, of a country stranded in political instability, still tinges Every day the picture becomes more alarmed by the news arriving from the real economy. Lastly, Volkswagen's announcement of a recovery plan so broad as to put the production of at least one large plant in Germany at stake and to cancel the pact stipulated way back in 1994 with the unions to freeze layoffs until 2029.
FEARS OF A PROLONGED POLITICAL PARALYSIS
Looking at the two Länder overwhelmed by the success of the far-right AfD and the left-wing populist party BSW, economist Monika Schnitzer, president of the German Council of Economic Experts, the independent body that advises the government on economic policy issues and financial, is alarmed by the power vacuum that could last for a long time: "Due to the unclear situation of the majority, the formation of a government will be difficult, in Thuringia even more difficult than in Saxony, and it could take weeks or even months" , he said.
Without a stable majority there are no political decisions and above all no state budget will be approved. “This means that businesses, universities, cultural institutions and citizens have no certainty in planning their strategies,” added the economist: “Uncertainty is poison, especially for the economy; companies will delay or completely abandon investment plans, with negative effects on growth. We therefore need to quickly clarify what happens next, including the options of a minority government or even new elections."
THE IW IN COLOGNE CRITICIZES THE SCHOLZ GOVERNMENT'S WELFARE ASSISTANCE
Even for economists at the Institut der deutschen Wirtschaft (Iw) in Cologne, a think tank close to entrepreneurs, the election results in Saxony and Thuringia are "a bad signal". “This cannot bode well for the economy, because it needs political predictability, institutional stability and reliable framework conditions,” said director Michael Hüther.
Looking up from the two eastern federal states to the national government, Hüther is convinced that the prudent and essentially statist policy of the Berlin government also influenced the regional vote and therefore that the challenges there too must be faced with decision and greater courage: "A what is clear, more social policy does not prevent people from voting for populist parties,” says Hüther, “since fears of decline and experiences of devaluation have a great influence, what is needed is a state that invests strategically rather than a post-welfare welfare state."
FUEST (IFO), FOREIGN INVESTMENTS AND LABOR AT RISK
However, the economic world, dealing with the shortage of manpower and the need to find it abroad, cannot ignore the boomerang effect produced by the advance of over 30 percent of a party that makes xenophobia one of its points of Force. An extremization of a sentiment which is, however, largely a majority among the population, which perceives the insecurity caused by more or less legal immigration which has long escaped the control of the authorities and by the lack of integration of some of it.
Clemens Fuest, president of the Ifo Institute in Munich, reflects on this. “It should generally be assumed that this tends to discourage workers with a migrant background,” said Fuest, “companies could therefore consider other federal states, especially when making new investments with a flexible location.” Our thoughts turn above all to Saxony Valley, the technological hub developed in the surroundings of Dresden, recently back in the spotlight due to the laying of the foundation stone of the chip factory in joint venture with the Taiwanese giant TSMC, but also to investments such as that of Intel in other Eastern German state.
The head of the Ifo expressed concern above all for services in a delicate sector such as the health system, in which many foreigners are already employed today. And in the east the population is older and the need to fill vacant positions is greater. “Supply difficulties could become more frequent if, as in other sectors, labor shortages increase in the healthcare sector,” Fuest added.
THE SPECTRUM OF AfD FRIGHTENS COMPANIES
The attention of Marcel Fratzscher, director of the Deutsches Institut für Wirtschaftsforschung (Diw) in Berlin, is also focused on the economic and social consequences of the strengthening of the AfD. “The AfD advocates an extremely neoliberal economic policy, protectionism and isolation from Europe,” Fratzscher said, “and advocates less immigration of skilled workers and less openness and diversity.” In his opinion, it is very likely that the election results will lead to an exodus of companies and skilled workers from both regions. “Especially young, qualified and highly motivated citizens will leave the two Länder and go to places where they can experience more openness and appreciation,” the economist said, “and this could lead to an increase in bankruptcies and an exodus of companies.”
An opinion shared by an authoritative economist such as Jens Südekum, professor at the Heinrich-Heine-Universität of Düsseldorf and in the past personal advisor to the Christian-Democratic Minister of Economy Peter Altmeier: “No international investor and much less no foreign specialist would feel at ease in a Land where AfD obtained the highest number of votes,” he said.
A LONG-TERM CLASH BETWEEN THE BUSINESS WORLD AND AfD
On the other hand, clashes had already begun during the electoral campaign between economists and entrepreneurs on the one hand and AfD candidates on the other. The economic world, generally rather reluctant to take sides before the elections, had opened an unusual polemical front with the far-right party, criticizing both the protectionist lines of economic policy and the aggressive tone against immigrants. Precisely the eastern regions, penalized by the hemorrhage of young people towards the West which has never stopped since the 1990s, are in absolute need of foreign labour, say economists and entrepreneurs, but the rancorous climate which the slogans and actions of the AfD contribute to fueling also distances the skilled labor from abroad.
The conflict did not end with the vote. While on the one hand analysts continue to fear the lost attractiveness of the eastern Länder, AfD representatives send their criticism back to the sender. As did one of the party leaders, Tino Chrupalla, who during the post-vote conference in Berlin blamed the higher energy prices in the East compared to the West as one of the main reasons for business emigration. This is also a real issue, if it is true that the Federal Network Agency and the Ministry of Green Economy Robert Habeck announced, two days before the vote, that they wanted to take action by redistributing the fees for electricity in a more balanced manner among the Länder. electricity grid. Tariffs which so far have penalized the eastern (and also northern) regions, areas which generate much more renewable electricity than they consume, and which suffer significant costs for the conversion of the networks.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/voto-afd-germania-est-economisti/ on Wed, 04 Sep 2024 04:34:59 +0000.