Germany voted today in an election that may prove more important than an ordinary change of government. Early results put Friedrich Merz’s CDU/CSU first with roughly 29% of the vote, positioning him to become the next chancellor, while the far-right Alternative für Deutschland (AfD) has surged to around 20%, approximately doubling its 2021 result and achieving the strongest national performance by a far-right German party since the Second World War. Chancellor Olaf Scholz’s Social Democrats have fallen to roughly 16%, their worst federal result in the post-war era, while the Greens have also lost ground. The immediate interpretation is straightforward: Scholz’s coalition collapsed politically before it collapsed electorally, voters wanted change and Merz benefited. But the more important shift is structural. Germany’s old governing centre has not disappeared, but it is becoming smaller while parties previously considered outside the normal governing consensus absorb more of the electorate. The question is whether mainstream parties can respond to that shift without either copying the AfD or pretending its voters have nothing legitimate to complain about.
The economic context matters because Germany is not merely experiencing an unpopular government. Its economic model has suffered several simultaneous shocks. For decades, German industry benefited from a remarkably favourable combination: relatively inexpensive Russian energy, enormous Chinese demand for German machinery and automobiles, access to European markets and an American security umbrella that allowed defence spending to remain comparatively low. Each component has weakened. Russia’s invasion of Ukraine destroyed the old energy relationship. China has become a formidable industrial competitor, particularly in electric vehicles, batteries and machinery. The United States increasingly expects Europe to finance more of its own defence. Meanwhile, Germany’s economy has contracted for two consecutive years, making it one of the weakest performers among major advanced economies.
This is therefore not simply a conventional recession. It is a structural business-model problem. Germany became extraordinarily good at producing high-quality manufactured goods using globally integrated supply chains and exporting them into expanding international markets. The world around that model has changed faster than German institutions have adapted.
The automobile sector demonstrates the problem clearly. German manufacturers built global reputations around internal-combustion engineering. The transition towards electric vehicles changes where competitive advantage sits. Batteries, software and semiconductor integration become more important relative to mechanical engineering. Chinese manufacturers such as BYD have expanded rapidly and can produce EVs at highly competitive prices.
Germany therefore faces a form of technological incumbent’s dilemma.
The capabilities that created past success can make transformation harder because firms, workers and regions possess enormous investments in the existing technology.
A company designing petrol engines employs specialised engineers.
Suppliers manufacture transmissions and exhaust systems.
Towns depend on factories serving those supply chains.
Moving towards EVs therefore does not simply require purchasing new machines.
It redistributes employment and economic geography.
This helps explain why climate policy has become politically difficult. The economic case for decarbonisation may be strong over the long term, particularly given Europe’s dependence on imported fossil fuels. But the adjustment costs occur now and are concentrated in particular industries and households.
Again, transition policy is distribution policy.
A worker who loses an automotive job experiences a much larger cost than the average citizen experiences from slightly lower future emissions.
Governments therefore need to make structural transitions politically sustainable through retraining, infrastructure and new investment rather than assuming aggregate benefits will generate automatic support.
Energy policy adds another constraint. Germany simultaneously moved away from Russian gas and completed its nuclear phase-out, increasing reliance on alternative imports and renewable expansion. Energy-intensive manufacturers have consequently faced higher costs than competitors in regions with cheaper electricity or gas.
This does not mean Germany should simply reopen every previous energy relationship. Dependence on Russia created a strategic vulnerability revealed brutally after 2022.
The lesson is about diversification and sequencing.
Reducing one energy source is easier when alternatives already possess sufficient capacity.
Energy transitions become economically expensive when political decisions remove supply faster than infrastructure replaces it.
The AfD has exploited these pressures by connecting economic frustration with immigration, opposition to climate policy and dissatisfaction with Germany’s support for Ukraine. Its argument is essentially that mainstream parties impose costs on ordinary Germans in pursuit of international or ideological objectives while failing to control borders or protect domestic prosperity.
This narrative works because it creates one explanation for several different grievances.
High energy prices.
Migration.
Ukraine spending.
Industrial decline.
EU regulation.
The actual causal relationships are much more complicated.
Politically, simplicity has value.
The AfD’s immigration message has been especially powerful. Germany accepted very large numbers of refugees during the 2015 migration crisis under Angela Merkel and subsequently received substantial numbers of Ukrainians after Russia’s invasion. More recent attacks involving asylum seekers have intensified concerns around security and enforcement.
Again, the strongest mainstream response is not claiming immigration concerns are inherently illegitimate.
It is demonstrating administrative control.
Process asylum applications rapidly.
Deport people whose claims fail where legally possible.
Integrate people permitted to remain into employment and language systems.
Attract skilled migrants where Germany’s ageing economy requires labour.
These objectives are compatible.
The failure occurs when governments appear capable of doing none reliably.
Germany actually needs immigration economically because its population is ageing and labour shortages are emerging across several sectors. But saying “Germany needs migrants” is politically insufficient if citizens believe government cannot determine which migrants enter, how many remain and whether laws are enforced.
This is the distinction between immigration and uncontrolled immigration.
A capable state can support substantial legal migration while maintaining credible borders.
The stronger state capacity becomes, the less polarised the underlying policy choice needs to be.
Merz understands this and has moved the CDU towards tougher migration positions. The strategic danger is allowing AfD priorities to determine the entire political agenda. When mainstream parties continually shift towards a populist challenger, the challenger can claim ideological victory even without governing.
This is the agenda-setting power of opposition parties.
A party does not need cabinet seats to transform policy.
It needs other parties to decide that its voters are electorally indispensable.
Trump achieved this within the Republican Party before returning to office.
The AfD is attempting something similar from outside Germany’s governing coalition.
The CDU now faces a difficult balancing act.
It wants to recover conservative voters from the AfD.
It also needs coalition partners from the centre because every major party continues to reject formal cooperation with the AfD.
Move too far right and coalition formation becomes harder.
Remain too centrist and the AfD can retain an issue monopoly.
This is why Germany’s firewall, or Brandmauer, against the AfD is becoming increasingly difficult politically. The principle is that mainstream parties will not form coalitions with a party they regard as extremist. Given the AfD’s radical factions and the history of German democracy, the caution is understandable.
But the firewall produces a mathematical consequence.
As the AfD’s vote share rises, the remaining parties need increasingly broad coalitions to govern around it.
At 5%, exclusion is easy.
At 10%, manageable.
At 20%, coalition arithmetic changes dramatically.
At 30%, excluding the party could require almost every other political bloc to cooperate.
This is the cordon-sanitaire paradox again.
The stronger the excluded party becomes, the more heterogeneous the coalition required to exclude it.
The more heterogeneous that coalition becomes, the easier it is for the excluded party to claim that all mainstream parties are fundamentally one establishment.
This does not mean Germany should simply allow the AfD into government because it has become larger.
It means the firewall is a short-term institutional defence, not a long-term electoral strategy.
The sustainable solution is reducing the AfD’s support through competition.
That requires answering the grievances from which it recruits while challenging the explanations or policies that are inaccurate or discriminatory.
The eastern-western divide remains particularly important. The AfD performs dramatically better across much of former East Germany, where economic convergence since reunification remains incomplete and demographic decline has affected many communities.
As discussed after the Thuringia election, this is not simply poverty.
It is relative status.
Eastern Germany became much wealthier after reunification.
Western Germany remained wealthier.
A region can therefore experience enormous absolute progress while continuing to perceive itself as structurally subordinate.
Representation matters too.
Many leading institutions in business, academia and government remain disproportionately staffed by western Germans.
Economic convergence without equivalent elite representation can therefore leave citizens believing formal reunification did not produce equal influence.
The AfD converts that feeling into anti-establishment politics.
Merz will need to respond materially rather than symbolically.
Investment in eastern infrastructure, universities, advanced manufacturing and public services can create local opportunity.
But regional policy should not simply transfer money indefinitely.
The objective should be generating self-sustaining economic clusters capable of attracting people and capital.
Some eastern cities such as Leipzig and Dresden already demonstrate that transformation is possible.
Germany needs more of those growth centres.
The fiscal question becomes difficult because Germany’s constitutional debt brake sharply constrains structural federal borrowing. The rule was designed to prevent unsustainable public debt and reflects Germany’s longstanding fiscal conservatism.
That discipline has benefits.
Germany’s public debt is much lower relative to GDP than several other major European economies.
But fiscal rules designed for one geopolitical environment can become restrictive when investment requirements change.
Germany now needs enormous spending on defence, electricity grids, railways, digital infrastructure and industrial transformation.
This creates the question:
when does fiscal restraint protect future generations, and when does underinvestment impose costs on future generations instead?
Borrowing to finance permanent consumption is different from borrowing to build productive infrastructure with returns lasting decades.
Economically, those expenditures should not necessarily be treated identically.
The debt brake therefore may require reform or reinterpretation.
Merz historically defended fiscal discipline strongly, but the geopolitical environment could force pragmatism.
Defence makes the problem unavoidable.
Trump has repeatedly demanded that European countries spend more on their own security, while his administration’s approach to Ukraine has raised doubts about how automatically Europe can rely on American support.
Germany therefore needs greater military capacity regardless of who occupies the White House.
This means the post-Cold War peace dividend is over.
Defence expenditure competes with pensions, infrastructure and social programmes unless taxes or borrowing rise.
Again, geopolitical autonomy has a fiscal price.
European leaders cannot demand strategic independence from Washington while expecting American taxpayers to continue financing much of the capability making independence possible.
Germany, as Europe’s largest economy, will carry a particularly large share.
Ukraine therefore becomes both a foreign-policy and domestic-budget issue.
The AfD opposes much of Germany’s military support for Kyiv and advocates better relations with Russia.
Some voters support this because they want lower energy costs or fear escalation.
The mainstream argument is that allowing Russia to profit from territorial aggression would increase European security risks and eventually require even greater defence expenditure.
This is a disagreement about time horizons.
Reducing Ukraine support can save resources today.
If it increases future Russian coercive power, costs may rise later.
Security policy resembles insurance.
The benefit of successful deterrence is an event that does not happen.
That makes it politically difficult to sell.
Merz will need to explain this much more clearly than Scholz did.
The SPD’s collapse demonstrates the political cost of appearing simultaneously cautious, divided and ineffective. Scholz often governed through incremental compromise, a style that worked reasonably during Merkel’s era of relative stability.
The geopolitical environment changed.
Voters increasingly wanted clearer direction.
This does not mean decisive rhetoric automatically produces better policy.
It means leadership style interacts with external conditions.
Consensus politics performs well when the system needs optimisation.
Crisis can increase demand for prioritisation.
Merz now benefits from that demand.
He will also inherit its expectations.
That is the danger.
Campaigning allows him to attribute Germany’s problems to Scholz’s coalition.
Government will reveal how many are actually reversible.
China will remain a manufacturing competitor.
Energy will remain more expensive than during the era of cheap Russian gas.
Germany will remain demographically old.
European defence will remain expensive.
The constitutional system will still require coalition government.
No election changes those constraints.
This is the structural inheritance problem once again.
Governments can change policy.
They cannot change geography, demographics or technological competition instantly.
The AfD will benefit if Merz promises rapid restoration and produces only incremental improvement.
This gives the incoming government a narrow political window.
It needs visible evidence that institutions can still solve problems before anti-establishment voters conclude that replacing one mainstream coalition with another changed nothing.
The most useful success metrics therefore are practical.
Does investment rise?
Do energy costs become more competitive?
Does infrastructure improve?
Are asylum decisions processed faster?
Does skilled immigration become easier while irregular migration falls?
Does defence procurement become more efficient?
Do eastern regions receive productive investment rather than permanent subsidy?
These outcomes matter more than whether Merz sounds tougher than Scholz.
The election has already delivered one clear message.
German voters punished the government severely.
They did not give the CDU/CSU a majority.
They gave the AfD its strongest national result.
That means Germany is not simply returning to centre-right politics.
It is entering a more fragmented system in which the centre survives but commands a smaller share of automatic loyalty.
The next government’s task is therefore larger than replacing Scholz.
It needs to demonstrate why mainstream democratic government remains capable of adaptation.
The firewall can keep the AfD outside cabinet rooms.
Only performance can keep it from growing outside them.
That distinction may define German politics for the rest of the decade.
Germany’s post-war system has been remarkably successful at constraining political extremism through institutions.
The 2025 election suggests those institutions now need something additional.
Not weaker constitutional safeguards.
Better outcomes.
Because democratic systems cannot indefinitely answer dissatisfaction by telling voters which parties they should fear.
Eventually they need to give voters something they positively want to preserve.
