A Germany in Economic Trouble Feels the Trump Effect

 By Henry Srebrnik, [Saint John, N.B.] Telegraph-Journal

The leaders of the European Union, meeting in Brussels last October, knew they are in trouble, as parties running on harder anti-immigration measures gain power. The president of the European Council, Charles Michel, acknowledged that this was a major challenge.

The gathering focused on concrete measures to prevent irregular migration, including strengthened control of external borders and reinforced return policies for migrants.

In fact, Germany already is feeling the heat. A new election now looms, with a strengthened Alternative for Germany (AfD), which has gained momentum since the attack on a Christmas market in the city of Magdeburg Dec. 20. Almost 300 people were injured and six lost their lives after a Saudi-born man ploughed a car into crowds of shoppers.

Long considered an extremist fringe group, the AfD now stands to receive 21 per cent of the vote in Germany’s forthcoming Feb. 23 national election, called after Chancellor Olaf Scholz’s three-party coalition collapsed in November.

A YouGov poll published Jan. 8 found voters favouring the conservative Christian Democratic Union, at about 29 per cent, while Scholz’s own ruling Social Democrats are running at just 16 per cent, and the Greens are at just 14 percent. Four out of 10 Germans are worried about the political future.

AfD candidates won about 30 per cent of the vote in three east German states that went to the polls last September and the party is now the most popular among Germany’s 18-24-year-olds. The AfD supports tight controls on immigration, tax cuts, and an immediate end to the Ukraine War.

Donald Trump may not yet be in office, but Elon Musk, the world’s richest man and his close adviser, has endorsed the AfD. He believes it is the “last spark of hope” for Germany.

“The traditional parties have failed in Germany,” Musk wrote in an article published Dec. 29 by the German Welt am Sonntag newspaper “Their policies have led to economic stagnation, social unrest, and the erosion of national identity.

“This is not about xenophobia, but about ensuring that Germany does not lose its identity in the pursuit of globalization,” he wrote. “It addresses the problems of the moment without the political correctness that often obscures the truth.

“The portrayal of the AfD as far-right is clearly wrong considering that Alice Weidel, the leader of the party, has a same-sex partner from Sri Lanka! Does that sound like Hitler to you? Come on!” he contended.

Musk took his endorsement of the party further on Jan. 9, hosting a live, English-language interview with Weidel, a former investment banker. She has suggested that Germans have become “slaves” to the United States, including aiding America in wars over the last 30 years.

 “I think Alice Weidel is a very reasonable person, and hopefully people can tell just from this conversation. Nothing outrageous is being proposed, just common sense,” he stated afterwards. Voting for the AfD “is simply the sensible move.”

Musk’s intrusion into the election has sparked fury from EU leaders and lawmakers, who have urged Brussels to deploy its full legal might to rein in the billionaire tech magnate.

Musk claimed he had the “right” to address the country’s political climate as he has “made significant investments” in Germany’s technological and industrial sectors. And the German economy is indeed not doing well.

Musk’s “interference” comes amidst reports that the German economy, the EU’s largest, may shrink further this year after a contraction of 0.3 per cent in 2023 and 2024. In December, the German central bank lowered its growth forecast for 2025 to 0.2 per cent from 1.1 per cent forecast in June. 

The German Chamber of Industry and Commerce (DIHK) has been providing assessments of around 3,300 companies since 2012. According to its recent survey, 40 per cent of industrial companies are currently considering reducing their production in Germany or relocating it abroad due to the energy situation; among industrial companies with more than 500 employees, more than half are now considering this.

“High labour costs, caused by the myriad regulations of a hyperactive administrative state, and among the world’s highest energy prices brought about by its Energiewende (the ongoing energy transition) folly, have led to the nation’s de-industrialisation.”

The German economy is in the midst of the biggest crisis in post-war history, according to a report out of the Handelsblatt Research Institute (HRI). “The pandemic, the energy crisis, and inflation have made Germans poorer on average,” noted Bert Rurup, chief economist at HRI.

There were almost a quarter more corporate bankruptcies in 2024 versus 2023, with 22,400 companies becoming insolvent, the highest number since 2015. The number of consumer bankruptcies increased by 8.5 per cent to just over 72,000 as well. 

In terms of layoffs, manufacturing and construction have been the hardest hit. While the HRI report shows that employment increased slightly to 46.1 million people last year, the group now expects a decline of around 10,000 employed people per month.

The resultant layoffs mean that the unemployment figure could exceed the three million mark for the first time in 10 years this year, according to the Federal Employment Agency, with the crown jewel of German industry, its automative sector, announcing major job cuts. Yet, as Scholz has admitted, 300,000 people came to Germany “irregularly” in 2023.