Germany's mainstream parties are stuck in an old ideology
During a press conference in March, German Chancellor Olaf Scholz promised that the green transition will lead to growth rates last seen during the economic miracle of the 1950s. During that decade, the West German economy grew by 8% per annum, outperforming all of Europe and most of the world. As we now know, at the time of Scholz’s speech the economy was already in recession, and based on current forecasts Germany could well be the only G7 nation with a contracting economy this year.
This downturn is beginning to leave an impact on national voting intentions, with the Right-wing Alternative for Germany (AfD) neck and neck with the Social Democratic Party (SPD). In some polls, the AfD has even overtaken Scholz’s party. All the while, the German Greens continue to fall behind, having dropped to 14% after a high point of 23% in August 2022.
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German analysts seem baffled by the AfD’s sudden popularity, and economists warn that this appetite for “far-Right” politics could harm the country’s competitiveness. What few wish to admit, however, is that many Germans are more worried about what the current government is already doing to the economy. Consequently, it should be expected that many start taking Alternative for Germany’s name very literally. Electricity and energy costs remain high — with generating costs of 10 cents per kW/h, compared to three cents per kW/h in the US and four cents per kW/h in China.
Predictably, energy-intensive industries are now considering offshoring their production. What’s more, Roland Farnung, the former CEO of energy giant RWE, expects prices to reach 15 cents by 2030, making Germany even less competitive. Yet, despite this outlook, both the German government and the EU are planning to make heat pumps mandatory, without knowing where the electricity will come from. As the investor and analyst Alexander Stahel has pointed out, Germany’s grid has been systematically starved of excess electricity, and it is likely that the once major electricity exporter will become a net importer.
Consequently, the coalition government has now gone back on its claims that the focus on renewables will lead to cheaper energy and an abundance of electricity at low prices. In fact, economy minister Robert Habeck wants to reduce German energy consumption by 25% before 2030 — something that cannot be achieved without reductions in living standards.
In light of these developments, it should be no surprise that voters are increasingly drawn to the AfD’s offer. Its politicians can correctly point out that they supported both nuclear energy and fracking in Germany when no other party was even willing to discuss these issues. For all its ideological zeal over migration, the AfD has managed to remain pragmatic about energy. This quality has come into clearer focus following the European energy crisis which began last year.
Ironically, it would be easy to stop the rise of the German Right if the established parties were able to just admit that they got energy and inflation wrong, and vowed to change course. Unless they do that, the AfD and similar parties will continue to win over voters, and it is unlikely that we have seen their peak yet.