Ahead of major investment conference in Berlin: German Economy Minister issues warning
German Economy Minister Katrina Reiche warned in a Financial Times interview that rising support for the "Alternative for Germany" (AfD) party could deter foreign investors ahead of critical state elections.
German Economy Minister Katrina Reiche warned in an interview with the Financial Times (FT) that the rise in support for the far-right "Alternative for Germany" (AfD) party could undermine government efforts to attract foreign investors.
Germany aims to raise at least 3.75 trillion euros in private capital by 2040. Ahead of the country's first investment summit, scheduled for October in Berlin, the Economy Minister cautioned that growing support for the AfD could "raise concerns" among potential investors.
Chancellor Friedrich Merz's coalition government hopes to use the summit to secure significant commitments from international investors to revive Germany's sluggish economy. However, reports indicate that ahead of the "Invest in Germany" summit, opening October 19, the AfD may record historic gains in elections across two states formerly part of East Germany.
Currently, the party is nearing an absolute majority in Saxony-Anhalt for the upcoming September elections. Germany's domestic intelligence service has previously determined that the AfD poses a potential threat to the country's democracy.
"When you look at the AfD's program, it is very clear that they oppose a market economy," said Reiche.
She described the party's platform as a "wild mixture" lacking a clear economic concept and containing "socialist elements." Reiche, who was born in the former East Germany, also characterized the AfD as one of "Putin's best allies."
Reiche's warnings echo those of Tanja Gönner, head of the BDI, Germany's central industrial lobby. Gönner stated earlier this month that the possibility of the party integrating into state governance would be "destructive," creating uncertainty and weakening Germany's position as an investment destination.
Reiche explained that the Merz government seeks to leverage its debt-financed investment plan to raise "at least 3.75 trillion euros in additional private capital by 2040." This amount is intended to supplement approximately 1.9 trillion euros in public investment planned for the same period. The government has eased the "debt brake" limits enshrined in the German constitution to facilitate investments in defense, infrastructure, and carbon emission reduction.
Reiche noted that she has been speaking with investors from the U.S., Asia, and the Middle East, presenting them with a "once-in-a-lifetime opportunity" to invest in Germany's "Mittelstand"—small and medium-sized family businesses currently undergoing generational management transitions.
Despite current economic headwinds, Reiche, a member of the center-right Christian Democratic Union (CDU), emphasized that Germany remains an "industrial powerhouse" with competitive industrial networks, groundbreaking research, and a highly skilled workforce. While global investment managers are closely monitoring the Merz government's reform agenda, Reiche acknowledged that their primary concern remains the future progress of these reforms.
Domestically, senior politicians from both the CDU and the Social Democratic Party have begun to challenge parts of the planned pension reform, particularly the cancellation of early retirement incentives for workers with 45 years of service, raising questions about the government's ability to implement the reform as intended.
