German Economy Minister Says the Rise of the AfD Could Deter Investors

Katherina Reiche, Germany's minister for economic affairs and energy, has warned that the rise of Alternative for Germany (AfD) could discourage investors, as Berlin pursues a target of attracting 3.75 trillion euros in private capital by 2040. The sum is the government's estimate of what the country's energy, transport and industrial base will need over the next fourteen years, and it cannot be raised from public budgets.

The claim is contested inside Germany. The conservative weekly Junge Freiheit reported that Martin Blessing, an adviser to Chancellor Friedrich Merz on attracting foreign investment, holds that debates over expropriation coming from the left unsettle investors more than AfD election results do. Both positions describe the same underlying condition, which is that political outcomes have become an input into German capital budgeting.

Household finances give a second reading of the same economy. Euronews reported that although more Europeans can now afford a week-long holiday, five countries saw the share unable to afford one increase, among them Germany and three Nordic states.

A government seeking private capital to fund an industrial transition, while consumer purchasing power at home is falling, faces a sequencing problem. Investors price expected returns, and returns depend on demand that is currently weakening.