Saxony-Anhalt's Vote Is a Stress Test for Germany's Economy

The numbers don’t add up

Saxony-Anhalt is polling the AfD at over 40 percent ahead of Sunday’s vote. That is enough to win comfortably and possibly govern alone. Chancellor Friedrich Merz called the prospect damaging for a state that already sits at the bottom of every German economic ranking.

The math is blunt. The state produces 1.8 percent of Germany’s total output. Last year its nominal GDP per capita was 38,452 euros — the lowest of all sixteen states. The population is projected to shrink another 15 percent by 2040 compared with 2022 levels. Jobless rates never fully recovered after the industrial collapse that followed the fall of the Berlin Wall.

The AfD says all of that is fixable. Ulrich Siegmund, the party’s top state candidate, promised an economic boom under an AfD government. New jobs. Value creation driven forward. Planning certainty free from climate mandates and quota requirements. Big companies would come.

The Leibniz Institute for Economic Research in Halle ran the numbers on the AfD manifesto and found a funding gap of at least 2.2 billion euros every year. Reint Gropp, the institute’s president, called the plans irrelevant in economic terms and said they would not be implemented.

The labor trap

The sharper problem is demographic. Gropp identified the AfD’s anti-immigration stance as the critical error. The state needs nursing staff, doctors, construction workers. Many of those people would simply work elsewhere if the political climate turned hostile.

This is not hypothetical. After 1989, the shutdown of inefficient East German factories triggered mass unemployment and population flight. Unemployment surged above 20 percent. It only began a slow descent from 2005 onward, settling around eight percent today.

The AfD wants to reverse that trajectory in the opposite direction — not by attracting workers, but by making the state unwelcoming to them. Its proposals include baby bonuses for German couples and promises of no new taxes and no new debt. Those commitments are internally consistent only if you ignore the revenue shortfall.

What makes the situation especially fragile is that the state’s workforce participation rate has been declining for two decades. The remaining working-age population is older than the national average. Each retiree who leaves the labor force creates a gap that is harder to fill than the last, because the pool of potential replacements shrinks alongside the overall population. A restrictive immigration stance does not merely fail to attract new workers — it actively drives away the ones already here. Healthcare providers in Saxony-Anhalt have quietly warned that if the political tone shifts further against migration, a significant share of their international staffing would look elsewhere. The state’s hospitals operate with tight margins and heavy reliance on overseas-trained nurses. That dependency is not a secret, but it is rarely discussed in campaign debates.

The energy bet

The AfD also wants to halt the expansion of wind power and restrict new solar installations. Wind and solar together already produce more than 60 percent of the state’s electricity. Reversing that course and boosting coal again would be counterproductive, according to Gropp, both economically and climatically.

Merz argued directly that international investors would not want to break ground alongside an AfD state premier. The point is not prejudice — it is risk pricing. A government that signals hostility toward immigration and global trade, and that plans to unwind renewable infrastructure, raises the cost of capital for anyone considering a factory here.

Siegmund fired back that Merz presided over the deindustrialization of Germany. There is a kernel of truth in that charge. The chemical industry that anchored Saxony-Anhalt since East German times shrank dramatically after reunification. But the alternative the AfD offers — fewer workers, less renewable energy, no fiscal room — does not rebuild that industrial base.

The state’s energy transition is not just a political project; it is an economic one. Several large energy-intensive companies have located operations in Saxony-Anhalt partly because of the relative availability of green electricity at competitive rates. A rollback would undercut one of the few competitive advantages the region has managed to build since reunification. It would also signal to the rest of Germany that electoral gains for the AfD could translate into real policy shifts, emboldening similar movements in other eastern states where the economic baseline is equally strained.

The national stakes

The wider implications stretch beyond Saxony-Anhalt. The German Institute for Economic Research estimated what would happen nationwide if the AfD implemented its full program, including pulling Germany out of the EU and the euro. President Marcel Fratzscher predicted a shock to growth that would hit hardest in regions with the strongest AfD support.

People in Saxony-Anhalt would lose around 1,600 euros in annual per capita income on average. Around 10,000 jobs could disappear.

Those figures are projections, not certainties. But they rest on real mechanisms: reduced trade flows, higher borrowing costs, brain drain, and the self-reinforcing nature of economic decline in regions that have been shrinking for three decades.

The second-order effects matter as much as the headline numbers. Local governments in Saxony-Anhalt already struggle to fund basic services — road maintenance, school buildings, public transport — with a shrinking tax base. A further drop in per capita income would force difficult choices: cut services, raise local taxes on an already depleted population, or borrow into debt that future generations would repay. Each option carries political costs. Merging municipalities, a common austerity measure, has proven deeply unpopular in the region and has not reliably produced savings.

There is also a cultural dimension. The state has experienced multiple waves of out-migration since 1990. Young people leave for better opportunities in Munich, Frankfurt, or Berlin. Those who stay tend to be older, poorer, or less mobile. The social fabric thins with each wave. An AfD government that accelerates this dynamic through policies that deter new arrivals would be addressing symptoms while deepening the disease.

Who wins, who loses

The AfD wins if it converts discontent into power without immediately facing the gap between campaign promises and governing reality. That is the classic pattern. Voters angry at Berlin get what they asked for, and the consequences arrive later.

International investors lose first. They price political risk into their decisions before the vote is even counted. Merz is right about that part.

Skilled workers lose too. Not because of anything they did, but because a state that needs them is telling them it does not want them. The demographic math in Saxony-Anhalt does not care about rhetoric.

What happens next

Sunday’s result will not determine German federal politics. But it will set a template. If the AfD governs in Saxony-Anhalt and the economic fallout plays out as economists predict, the party faces a choice: adapt or double down. Double down means more blame-shifting — at Berlin, at Brussels, at immigrants. Adapt means quietly reversing course on the policies that caused the damage.

Either path matters for the rest of the country. The AfD has been testing its ideas in eastern states for years. Saxony-Anhalt is the latest arena. The question is whether the voters who reward the experiment will still be satisfied when the bill comes due.

The deeper issue is whether German democracy can absorb a party that wins power by promising things its own economics say it cannot deliver, and then tries to govern anyway. The answer in Saxony-Anhalt will shape not just a state election but the limits of what the far right can achieve within Germany’s institutional framework. If the AfD stumbles under the weight of its own contradictions, it may lose ground in future votes. If it survives by shifting blame rather than policy, it gains a playbook for the rest of the country. The outcome of Sunday’s ballot will tell us which scenario we are watching.