“A PARTY THAT wants to abolish the euro, rejects immigration and denies climate change is hurting Germany as a place for doing business,” warns Karl Haeusgen, boss of the VDMA, Germany’s machinery association. Rainer Dulger, his counterpart at the BDA, the main association of German employers, says the strong polling numbers of the far-right Alternative for Germany (AfD) are upsetting him, personally and as an entrepreneur. And Siegfried Russwurm, boss of the biggest German industry association (BDI), thundered at an east German economic forum in Bad Saarow in June that “xenophobia and prejudice are the very last thing our country needs”.

In post-war German history business leaders have rarely, if ever, spoken out so openly about a major political party. But the policies pushed by the AfD would be so detrimental to the interests of Deutschland AG that the heads of the main business associations, as well as prominent bosses, are sounding the alarm about its creeping electoral success at the local level and in the polls.

The AfD started ten years ago as a single-issue party focused on Euroscepticism, but it has since become an anti-immigration populist party akin to other far-right parties in Europe, only more radical in some of its economic-policy proposals. It is still Eurosceptic: “We see the EU as unreformable and deem it a failed project,” says the prologue of the AfD programme for elections to the European Parliament next year. The party wants to abolish the euro and the parliament itself, and to reconstitute the union as a “confederacy of European nations”. It rejects, in particular, the EU’s climate and migration policies. It wants to build a “fortress Europe” by beefing up border controls and increasing deportations. It is anti-American and (sotto voce, these days) pro-Russian.

To the surprise of many in Germany’s business elite, the AfD has risen to second place in recent polls, with around 20% of voters saying they plan to back it at the next election. That puts it behind the Christian Democratic Union, the centre-right main opposition party, but comfortably ahead of Chancellor Olaf Scholz’s Social Democratic Party. Futhermore, it is the strongest party in four of the five eastern German states.

Battling a mild recession, high energy prices, an arcane bureaucracy and anxieties related to the war in Ukraine, German business leaders are already fighting on many fronts. Perhaps their biggest worry at the moment is the lack of skilled labour, which needs to come mostly from abroad because of Germany’s demographic problems. According to a survey of 9,000 companies by Ifo, an economic research institute, despite the sluggish economy 43% of firms surveyed reported suffering from a shortage of qualified staff in July, up from 42% in April. More than 75% of companies providing tax, legal and consultancy services said that they could not find the employees they needed.

Helped by some €15bn ($16.4bn) in subsidies from the German government, Saxony and Saxony-Anhalt, two eastern states, recently attracted a combined €40bn in investment by Intel and TSMC, an American and a Taiwanese maker of chips. They will need thousands of skilled workers. But the AfD is particularly strong in both places. According to an adviser to Intel, real or perceived local xenophobia is likely to become a big problem in getting talented staff to move to Germany from overseas in spite of the low rents, abundance of space, and free kindergartens and schools.

The government is on the case. “Today, employees and skilled workers…can choose where they go. And it’s often the supposedly soft factors that make the difference,” said Mr Scholz at the powwow in Bad Saarow. He said Germans needed to understand that “foreign skilled workers are not only needed, but really welcome”, and promised to introduce the world’s most modern immigration system. On August 23rd his cabinet duly passed legislation easing the rules for getting German citizenship, such as the length of time an applicant needs to have lived in Germany. But that will not be enough to blunt the damage being done by the AfD. ■