Germany’s fragile coalition dealt fresh blow as far-right AfD makes history

The ruling coalition in Berlin is likely to struggle onward until a nationwide vote next year, according to political commentators, following a historic state election win for the far-right AfD over the weekend.

The populist and anti-immigration AfD (Alternative for Germany) recorded successes in two state elections Sunday, securing far more votes than the parties currently in the national ruling coalition behind Chancellor Olaf Scholz.

Marcel Fratzscher, president of The German Institute of Economic Research, told CNBC’s “Street Signs Europe” on Monday, the result means the Scholz coalition will be challenged between now and the next general election in 2025.

“It will be very hard for the national government to implement any major reforms to push ahead,” he said.

Deutsche Bank economists shared a similar view in a note published Monday, noting that the results would likely put “further strains” onto the already fragile coalition. “Weak election results are likely to accelerate the switch into campaign mode for next year’s federal election, reducing the scope for meaningful reforms until then,” they said.

Preliminary results from the eastern German states of Thuringia and Saxony show that the far-right AfD garnered over 30% of votes in both states, even emerging as the biggest party in Thuringia with 32.8%.

The results would confirm an increase in votes for the far-right AfD since the last state elections in 2019, when it won around 28% in Saxony and 23% in Thuringia. The AfD’s win in Thuringia was the first time the party won a state election, and marked the first far-right win in a state election since World War II.

Despite the AfD’s success, it is unlikely to become part of the ruling state coalitions in both Saxony and Thuringia as most other, it not all, parties have said that they do not want to partner with the far right.

The election outcome also comes at a time where Germany’s economy — the largest in Europe — is struggling. Data released last week by the national statistics office Destatis reflected that Germany’s gross domestic product fell by 0.1% in the second quarter of 2024 from the previous quarter. Figures published Monday also showed that a German manufacturing PMI fell further into contraction territory in August, coming in at 42.4, a multi-month low.

Scholz’s center-left SPD (the social democrats) garnered just 7.3% of votes in Saxony and 6.1% in Thuringia, with other national government coalition partners, the Greens and the FDP (free democrats), faring even worse.