00:00I'll continue with a story and I'm joined by Renaud Foucault who is a senior economics lecturer
00:04at Lancaster University. Renaud, thanks so much for your time. It is still uncertain how and if
00:11AFD will actually take control of that state, but could there be an economic impact from this
00:18election result? The direct impact is going to be tiny because it's a relatively small number,
00:25it's less than 2% of the German economy, but the big question and what will really drive market
00:31because it's quite flat today, is what happens to the current plans to reform the German economy.
00:37So the German economy right now is having a tiny bounce, but they're expecting in the fall a big
00:42reform of the pension system, a bit overall of the bureaucracy of Germany, so trying to remove
00:47a lot of barriers to investment, to business, and also some changes to the general way the
00:55country is managed in terms of dealing with those European regulations that come. So big changes
01:01ahead and very big uncertainty as to MERS decide to double down or whether I think this is a moment
01:08to stop and slow down, which may be dangerous for Germany. Right, so it's not only about what the
01:14economic policy of the AFD is, it's about the fact that the Chancellor might have to focus really
01:21strongly on domestic politics and not so much on reviving the economy. But let's focus on the AFD's
01:28economic policy. I mean, we know that they're very unhappy about the money that's being spent on Ukraine.
01:34What else can you tell us? So at the moment, it's not really a party for government. So the program,
01:41for instance, pension reform, Germany, like everyone else in Europe, they need to somehow make it
01:46sustainable. The plan of the AFD is to spend more on pensions. The plan of the AFD is to spend
01:52more on
01:52pensions, also to have massive tax breaks, and at the same time to somehow magically balance the book.
01:58That's the kind of plan you make when you are 20 percent in the polls and you expect not to
02:03come to
02:04power. And for the rest, the only thing we really know about the AFD is that they are very strongly
02:09pro-Russia. So we've talked about lowering the sanctions, cutting the aid to Ukraine, but also
02:15they really want to revive an era, a foregone era of cheap Russian gas, but that will not happen as
02:22long
02:22as there are sanctions on Russia by every single Western partner of Germany. What options does
02:29Frederick Merckx have? He's obviously going to try and shore up his party, but he's fighting off a far
02:36right party at the heart of their concerns is the cost of living. And a lot of ordinary Germans are
02:41feeling that same way. So how does he do that? The first problem he faces right now is that Germany,
02:49to avoid leaving the AFD, they need to have a very broad coalition of almost everyone else.
02:55And that's really bad if you want to fend off the accusation of being mainstream and responsible for
03:00all the problems. So what he needs is to push with the agenda of reform and at the same time
03:05create some
03:05space to have an opposition which is not the AFD. And the last problem is the personality, that Merckx
03:12himself right now is very unpopular. We've seen in the United Kingdom that if you replace an unpopular
03:17centralist prime minister by popular one, you change completely the story. But who would be the Andy
03:23Burnham of Germany? That's very unclear right now. Saxony-Anhalt is in the former East Germany.
03:30It has a number of problems. It suffered from a shortage of skilled workers for many years. And
03:36traditionally, you can import foreign workers, but the AFD is very anti-immigration. Might it find,
03:43if it does come to power in that state that it's going to be really difficult to stick to its
03:48messaging?
03:50They want to do even more than that because they want to toughen off on migration. But you don't need
03:55to go as far as importing migrants from abroad. The problem of this lander is that it's not attractive
04:01for Germans or for Europeans. There is freedom of movement within Germany. There is freedom of movement
04:07within Europe. And the problem is that people have left the lander. So one of the reasons why the
04:12AFD is doing so well is that young people with better perspective, they've left. They've gone somewhere
04:18else. And so when only the people who are in difficulties are staying, you get an over-representation of
04:24people who are going to vote for anti-system parties. So what they really would need to do is to
04:29somehow
04:30boost up the economy of the lander, which is very difficult to do on such a small scale, and which
04:35also is very
04:36difficult to do if you send a message of we are scared and we are governed by people who have
04:41no particular
04:42economic plan. Thank you so much for speaking to us today. That's Renaud Foucault, a senior economics lecturer
04:48at Lancaster University.
