The far-right Alternative for Germany (AfD) won a landslide victory in the Saxony-Anhalt state election, taking 43.8% of the vote against 17.2% for Chancellor Friedrich Merz's Christian Democratic Union. The result piles pressure on Merz's unpopular federal government, though economists say it is unlikely to derail planned defense and infrastructure spending increases.
AfD secured 43.8% of the vote in Saxony-Anhalt over the weekend, more than double the 17.2% won by the incumbent CDU. Initial results show AfD taking 39 of 83 parliamentary seats, three short of an outright majority.
Other German parties maintain a so-called "firewall," agreeing not to cooperate with the far right in a way that would hand it political power. However, AfD candidate Ulrich Siegmund said Monday the party would hold discussions with individual parliamentary groups or lawmakers to see if they would support it in governing, according to Reuters.
Result raises stakes for eastern Germany
Mujtaba Rahman, managing director for Europe at Eurasia Group, described the result as potentially the most consequential German state-election outcome of the postwar era. The outcome raises the prospect of the far right taking power in a German state for the first time since the Nazi era.
At state level, the party has pledged stringently anti-refugee and anti-migrant policies, including accelerating deportations and separating the children of refugees into different classrooms, while encouraging small and medium-sized enterprises to use AI rather than migrant workers.
Voters seeking a genuinely radical break backed AfD, while liberal and left-wing voters swung to the Greens and the Social Democratic Party, squeezing the CDU from both sides, Rahman said. He warned that if the trend continues, upcoming elections in Mecklenburg-Western Pomerania and Berlin could turn the regional result into a rolling national crisis.
Public turns on economic stagnation
Saxony-Anhalt, a traditional hub for German chemicals and motor supplies, has suffered disproportionately from the post-unification collapse of east German industry and the recent spike in energy prices, Berenberg Chief Economist Holger Schmieding said.
The result deals a blow to Merz, whose government polling suggests is deeply unpopular. Former CDU economics minister Peter Altmaier told CNBC that dissatisfaction with national-level answers on industry, innovation and welfare contributed to the outcome, even though it was only a state election. The public is furious and turning to challenger parties on both the left and right after five years of economic stagnation and a lack of job creation, Altmaier said.
According to CNBC: "We expected the worst, but this result yesterday night was a kind of disaster", Altmaier said, adding that it will affect political debates and upcoming state elections across the country.
Reforms seen surviving, for now
Ministers in Poland and France, also facing mounting electoral gains for the far right, called the German result worrying on Monday, according to local media reports.
Schmieding said the Saxony-Anhalt election alone is very unlikely to derail Germany's planned increases in defense and infrastructure spending or the pension, tax, health-care and bureaucracy reforms set to be passed this fall. He said shying away from those reforms to strengthen Germany's growth potential would likely be worse for the coalition parties' long-run outlook.
It also seems more likely than not that Merz and his coalition will continue until the end of their federal parliamentary term in early 2029, Schmieding said. Even so, he added that the result is a major setback for the chancellor and adds to the risk of his government falling apart.
Source: CNBC
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