German politics have been rocked by a string of problems in the past few months, from economic volatility to a budgetary crisis and farmers’ protests. Through it all, the far-right Alternative for Germany (AfD) party has been a dark horse of sorts, cashing in on the dissatisfaction of Germans with their current government and soaring in popularity in key regions. At the same time, AfD has also faced calls for bans and some of its policies have been likened to Nazi-era Germany.
Now, as the right-wing populist party continues to gain ground in a troubled political environment, the chief of Germany’s biggest bank has raised the alarm over AfD’s impact on the economy and inflow of investments.
“Right-wing populists and extremists not only divide society, their concepts also lead directly to economic decline,” Deutsche Bank CEO Christian Sewing said at the group’s annual reception in Berlin on Monday, according to a translation of the speech viewed by Fortune.
He took the example of AfD’s anti-immigration stance—a topic at the center of protests earlier this month following reports that the party had floated the idea of mass deportation of foreigners—and how that went against Germany’s need for skilled workers. Sewing also gave other instances of where the AfD’s agenda is at odds with what he thought Germany needed, including greater integration with Europe and participation in the fight against climate change.
He noted that the growing popularity of AfD was a cause for concern as Germany’s democracy was at stake—as was its position as an investment hub.
“International investors are observing this with increasing skepticism,” Sewing said, adding that they were “questioning whether they can trust the democratic values and structures that are an important factor in their investment in Germany in the long term.”
This could potentially lead to lower investment in the country, Sewing cautioned.
“This is another reason why it is crucial that we take a stand against these right-wing extremist tendencies,” he said in his speech.
“The fact that people are taking to the streets all over Germany is a strong sign. But it is not enough.”
Deutsche Bank declined to comment further on the CEO’s address.
AfD’s proliferation
Founded only about a decade ago by a group of economists and politicians following the global financial crisis, AfD has taken strong nationalist and isolationist stances on topics such as Germany’s role in the EU (the party called EU a “failed project” and calling for a so-called “Dexit”).
Immigration has been another important fault line of AfD’s agenda, sparking concerns about what the party’s growing support could mean for Germany. Over the last few weeks, an estimated 1 million people have joined protests against the AfD after its participation in a meeting with far-right groups where they discussed a proposal to deport immigrants and even Germans who are seen as not having “assimilated” well enough.
Concerns about the far-right have prompted a group of 50 German businesses—including sports brand Puma and industrial company Thyssenkrupp—to sign an appeal for mainstream parties to fight their influence.
AfD’s traction is especially a concern as elections for the European Parliament as well as some East German states are due in the coming months.
AfD now trails behind only the main opposition bloc—the center-right CDU/CSU—and is far ahead of the three parties that make up Germany’s ruling coalition.
‘Sick man’ no more?
In his Monday address, the Deutsche Bank boss pushed back against the characterization of Germany as being the “sick man of Europe”— a phrase popularized in 1998 by economist Holger Schmieding, when the country was still navigating a post-reunification economy.
“We are not the sick man of Europe! But we could become one if we don’t set the course for future growth now,” Sewing said.
Sewing has said in the past that while Germany faces structural weaknesses and other challenges due to high costs, insufficient skilled workers and bureaucracy, it’s not in such a bad state as to be called the “sick man.”
In his recent speech, he reiterated some of these points, adding that active private sector involvement and making the most of globalization are some of the avenues to jump-start the German economy, which has been teetering close to recession, narrowly escaping it in 2023 despite shrinking by 0.3%.
“The forecasts are worrying: our bank’s economists assume that, without significant reforms, we will have to get used to annual growth rates of 0.5 per cent to 0.75 per cent in Germany,” he said. “We urgently need more speed—we have to step on the gas!”
