The German economy minister has issued a warning that the surging support for the far-right Alternative for Germany (AfD) party could hinder the government's efforts to attract investment. Germany is planning to mobilize at least 3.75 trillion euros in private capital for its economy by 2040. In an interview ahead of Germany's first investment summit in Berlin this October, Economy Minister Katharina Reiche stated that the rising popularity of the far-right AfD could create concerns for potential investors.
Chancellor Friedrich Merz's coalition government hopes the summit will secure large investment commitments from major international investors, including pension funds and private equity firms. This is a key component of Merz's strategy to revitalize the sluggish economy, which is grappling with multiple structural challenges: fierce industrial competition, high energy costs, and a rapidly aging workforce. However, just weeks before the "Invest in Germany" summit on October 19, two federal states in the former East Germany are holding parliamentary elections, where the AfD is expected to achieve historic gains. Multiple polls show that the far-right party is within striking distance of an absolute majority in the Saxony-Anhalt state election in September. Germany's Federal Office for the Protection of the Constitution (domestic intelligence service) has already classified the AfD as a potential threat to the country's democratic order.
"A look at the AfD's election manifesto makes it clear that the party is opposed to the market economy," Reiche said. She added that the platform is a patchwork of ideas, lacking a clear economic policy framework and incorporating several socialist-leaning proposals. Reiche, who is from the former East Germany, also stated that the AfD is one of President Putin's most reliable allies. Reiche's warning echoes the sentiments expressed earlier this month by Tanja Goehner, president of the Federation of German Industries (BDI), Germany's most influential industrial lobby. Goehner stated that if the AfD enters state government, the consequences would be disastrous, increasing market uncertainty and weakening Germany's appeal as an investment destination.
Reiche explained that the Merz government is leveraging a debt-financed investment plan, aiming to attract at least an additional 3.75 trillion euros in private capital by 2040. In addition, Germany will invest about 1.9 trillion euros in public funds over the same period. The government has relaxed the constitutionally enshrined debt brake to fund military upgrades, repair long-neglected infrastructure, and transition the energy grid to low-carbon sources. Reiche revealed that she has been in contact with overseas investors from the US, Asia, and the Middle East, promoting Germany's unique investment opportunity: the chance to invest in the country's world-renowned family-owned SMEs (the "Mittelstand"), which are currently facing a generational handover period.
As Europe's largest economy, Germany's October investment summit models itself on similar events in other countries, including the "Choose France" summit hosted by President Emmanuel Macron, which set a record earlier this year with 93 billion euros in investment pledges. The German government expects up to 200 investors to attend, including Goldman Sachs CEO David Solomon and BlackRock CEO Larry Fink, who previously hired Merz to serve as Chairman of BlackRock Germany. Reiche, a member of Merz's center-right Christian Democratic Union (CDU), emphasized that despite its current economic weaknesses, Germany remains a powerful industrial nation with competitive industrial clusters, cutting-edge research, and a highly skilled workforce. "This is the first time we in Germany are actively promoting our own appeal," she said. "For the first time, the government has realized it must actively market its business opportunities. This investment drive is not just about state-led initiatives; it's about leveraging private capital."
Reiche noted that investors from the US, Canadian pension funds, infrastructure companies, as well as investors from the Gulf states, Singapore, and Japan, have expressed interest in German projects. She also mentioned that global asset managers are closely monitoring the Merz government's reform agenda and have acknowledged the measures already implemented, including plans to add a capital market component to the public pension system. "Investors are now focused on whether the reforms can be sustained," Reiche said. Domestically, prominent CDU politicians and SPD lawmakers have begun to question parts of the pension reform, particularly the proposal to eliminate the early retirement privilege for workers with 45 years of accumulated service. This has raised doubts about whether the government can successfully implement the reform as planned.
Despite these concerns, Reiche emphasized that many of the investors she has spoken with are not fixated on short-term political fluctuations or macroeconomic difficulties. "They look at the business prospects of the companies and the value they can capture in Germany," she said. She believes that perspectives on German companies are often too pessimistic. "We sometimes forget our own strengths," she added, noting that international investors are often more clear-sighted about Germany's advantages. The October investment summit will be held at the European School of Management and Technology, located near the Foreign Ministry and the renovated Berlin City Palace. Attending investors will meet with Chancellor Merz, Finance Minister Lars Klingbeil, Reiche, and several other cabinet ministers. "There will be so many cabinet members present, we could almost field a half a football team," Reiche said, stressing the coalition's unified stance on the investment plan. The Merz coalition, comprising the CDU, its Bavarian sister party the CSU, and the SPD, will all demonstrate their commitment to advancing the investment drive at the summit.
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