Populist radical right parties have gained remarkable traction across Europe since the refugee crisis of 2014-2016. In a series of recent shock votes, the Alternative for Germany (AfD) party won elections in two East German states and also made substantial gains at national level. In the 2025 federal elections it doubled its support to more than 20 per cent of votes and also tops recent polls with almost 30 per cent of votes.
AfD’s breakthrough occurred despite significant efforts by the German establishment to contain its rise. The AfD, like most populist radical right parties (PRRPs) in Europe, respects the existing constitutional order and democratic rules. Yet, mainstream political parties instituted a “firewall” to isolate it from normal alliances and coalitions. Corporate media has constantly criticized the party as populist, right-wing extremist and a threat to democracy, while focusing heavily on scandals and controversial statements rather on its agenda and policies. Authorities have even classified the AfD as “confirmed right-wing extremist” in 2025, although this action was legally contested subsequently.
It is doubtful that almost one in three German voters support the AfD because they might entertain xenophobe and extremist views. Given Germany’s recent dismal economic performance and chronic industrial decline it is more likely that the party’s policies are striking a chord with voters’ economic grievances. AfD’s economic agenda is strongly market-liberal and could go a long way in addressing Germany’s economic woes. Paradoxically, despite its pro-business and anti-redistribution stance, the party enjoys significant support among blue-collar voters. This suggests that traditional voter preferences in favour of generous welfare redistribution and big government may start to change.
Unlike most other European populist parties, the AfD is openly market-liberal
Concerns about excessive immigration have driven the rise of PRRPs in Europe. Perceived failure to integrate newcomers, in particular those with a different cultural and religious background, led voters to believe that national identity, social cohesion and public safety were under threat. At the same time, political observers attribute the shift to the right also to the rise in economic insecurity and inflation, the costly green transition, euroscepticism, as well as the war in Ukraine.
PRRP’s political agenda is clearly targeted at tighter immigration controls, more conservative cultural policies, tougher crime prevention, and distrust of mainstream media and political parties. However, the economic agenda is less homogenous and has changed over time. Initially, the economic policies of PRRPs were based on a combination of nationalist and laissez-faire economic policies aiming at less taxation and welfare redistribution, in particular towards foreigners. With time, the majority of PRRPs diluted their pro-market stance and came to terms with accepting the reality of oversized European welfare systems.
In France, the Front National shifted to pro-welfare positions under Marine Le Pen, in order to meet voter expectations. Other PRRPs in Belgium, Italy and the Netherlands also underwent a centrist convergence of economic policies during the 1990s and 2000s, drawing up an inconsistent socio-economic agenda of market economics and generous welfare state. Overall, PRRPs tried to blur their economic positioning in order to attract voters from both the right and the left.
By contrast, the AfD has not embraced a blurred economic strategy. The party offers clear market-oriented and anti-redistribution policies, similar to Vox in Spain or the Swiss People’s Party. A 2026 University of Tübingen study classified the AfD as being market-liberal, business-friendly and fiscally conservative, even more so than the right-wing conservative CDU. The AfD’s economic agenda favours a balanced budget accompanied by lower government spending and taxation, appropriately claiming that Germany has an “expenditure problem”. The party also advocates maintaining Germany’s constitutionally-enshrined borrowing limits known as the “debt brake” and is openly pro-business, pledging to reduce the regulatory burden. At the same time, it holds a nationalist position in terms of energy sovereignty and protecting strategic industries, although it does not want to restrict foreign trade.
What Explains the AfD’s Surge in Popularity?
Initially, the party attracted an affluent and highly educated electorate, also because its founder, the economics professor Bernd Lucke, set a market-liberal agenda critical of the euro zone bailouts. This has gradually been replaced by supporters with lower socio-economic status. In the 2025 federal election, the AfD became the strongest party among workers, gathering about 38 per cent of their votes and among the unemployed (34 per cent). At first sight, the strong support from lower socio-economic categories for a pro-market economic agenda seems paradoxical. At a closer look, it appears rational given Germany’s current economic difficulties and the AfD’s proposed solutions.
The German economy has essentially stagnated since 2019, with a particularly poor performance since the start of the war in Ukraine in 2022. Industrial output declined steadily by a cumulated 15 per cent as the energy shock caused by the loss of cheap Russian gas wreaked havoc through energy-intensive industries, while manufacturing also came under pressure from the stiff Chinese competition and US tariffs. With a less competitive structure of production, East Germany has been hit harder by the decline, contributing to a stronger support for the AfD than in the West.
The AfD wants to break away from the establishment’s policy errors on the energy file. It is a strong proponent of ending the war in Ukraine through negotiations and resuming imports of cheaper gas from Russia. By contrast, Merz’s government supports escalating the military and financial support for Ukraine and embarking on a costly re-armament programme. The AfD is also against the over-ambitious climate policies that drove through the roof electricity and gas prices, and plans to lower much of the German and EU decarbonisation targets. That would obviously restore some of the lost industrial competitiveness and safeguard blue collar jobs. As a result, the party’s support has spread also to West Germany’s automotive heartlands such as Baden-Württemberg.
Instead of admitting that Germany’s fundamental economic problems are feeding the AfD’s popularity, the establishment claims that East Germans are fostering nostalgic sympathies for Russia. This would be rather paradoxical given that East Germans have lived under Soviet occupation and communism for almost 45 years, while craving for the freedom and higher living standards in the West. Surveys show that a majority of East Germans (74%) consider Russia a military threat, almost as many as West Germans (84%). However, views diverge about the adequate response, with the former being against supporting Ukraine militarily (56%) and the latter being in favour (62%). Anecdotal evidence shows that the majority of East Germans are not simply “pro-Russia”, but are more skeptical of the official pro-war propaganda, having experienced much stronger the dramatic consequences of World War 2.
Downsizing Germany’s generous welfare system is another important economic and social challenge. While not planning to dismantle Germany’s welfare state altogether, the AfD explicitly wants a smaller and more conditional welfare redistribution. The party advocates tightening significantly the eligibility of foreigners to welfare benefits, in particular of migrants and refugees, and align them to contributions. It also wants to strengthen requirements to take work for both natives and foreigners. AfD departs from the traditional “welfare chauvinism” of PRRPs by strongly supporting a smaller government through lower taxation of income, consumption, corporate and energy.
A Durable Change in Voter Preferences for Smaller Government?
Analysts noted that AfD supporters from lower socio-economic categories oppose class-based redistribution more strongly than non-AfD supporters in upper-middle class and even upper categories. Although they seem to vote against own economic interests, they have actually adapted to a situation where benefits from social redistribution have been superseded by more acute economic problems.
First, the distribution conflict between “bottom and top” earners has been gradually replaced by the “inside vs. outside” challenge. Rather than struggling for higher wages and heavier taxation of the wealthy, lower income earners understood that they stand to lose more if they do not protect themselves against foreigners who come to abuse the social welfare system.
Second, the persistent economic decline, job precarity and high inflation eroding real incomes made the public realize that oversized government expenditures have been largely misallocated. This has stifled economic growth and reversed the traditional flows of welfare redistribution. Crony capitalist elites are benefitting more and more from the taxpayer money through onerous public contracts and other privileges, rather than low income earners. Murray Rothbard’s critique of “crony capitalism” exposes convincingly the unholy alliance between big business interests and government power. Germany’s current large-scale re-armament drive and hefty green transition subsidies provide enormous opportunities for well-connected businesses to engage into political entrepreneurship and rent-seeking rather than market competition.
AfD’s remarkable rise shows that German voters are becoming ever more skeptical of failed interventionist and welfarist policies of centrist politicians. This is not tied only to immigration, but has much broader economic and political implications. The increasing preference for government downsizing bodes well for revitalizing economic dynamism and individual freedom in Germany and in Europe at large. It remains to be seen whether the AfD also delivers on its electoral promises and avoids the mistake of other right-wing populist movements that failed to implement consistently meaningful free-market policies. In this respect, AfD’s pledge to strengthen direct democracy by introducing referenda based on the Swiss model is key to improve people’s control over government policies.
