German economy minister warns AfD’s rise could deter investors

{"text":[[{"start":10.75,"text":"Germany’s economy minister has warned that rising support for the far-right Alternative for Germany could undermine the government’s efforts to woo foreign investors, as it seeks at least €3.75tn in private capital by 2040."}],[{"start":26.2,"text":"Speaking to the FT ahead of Germany’s first investment summit in Berlin in October, Katherina Reiche warned that growing political support for the far-right AfD might “raise concerns” among potential investors. "}],[{"start":40.75,"text":"Chancellor Friedrich Merz’s coalition government is hoping to use the event to secure big commitments from international investors such as pension funds and private equity groups. It is part of Merz’s efforts to revive a stagnant economy facing structural challenges, including stiff competition from China, high energy prices and a rapidly ageing workforce."}],[{"start":63.2,"text":"But weeks before the “Invest in Germany” conference starts on October 19, the AfD may secure historic wins in elections in two former East German states."}],[{"start":73.60000000000001,"text":"Notably, the far-right party is within reach of securing an absolute majority in Saxony-Anhalt in September, according to surveys. Germany’s domestic intelligence agency has said the AfD is potentially a threat to the country’s democracy."}],[{"start":87.95,"text":"“Looking at the AfD’s programme, it’s very clear that they are [opposed to the] market economy,” said Reiche, adding that the programme was a “wild mixture” lacking “a clear concept” on economic policy and containing “socialistic elements”. Reiche, who was born in former East Germany, described the AfD as one of the “best allies of [Vladimir] Putin”. "}],[{"start":108.75,"text":"Reiche’s warnings echo those of Tanja Gönner, head of BDI, Germany’s main industrial lobby, who earlier this month called a potential AfD role in a state government “disastrous”, arguing it would create uncertainty and weaken Germany as an investment location."}],[{"start":124.35,"text":"Merz’s government is seeking to leverage its debt-funded investment programme, with “at least €3.75tn in additional private capital” by 2040, Reiche said."}],[{"start":135.1,"text":"This would come in addition to about €1.9tn in public investment over the same period, according to Reiche. The government has relaxed its constitutional debt brake in order to invest in equipping the country’s armed forces, repairing its neglected infrastructure and decarbonising energy networks."}],[{"start":152.75,"text":"Reiche said she had spoken to US, Asian and Middle Eastern investors to pitch what she described as a once-in-a-lifetime opportunity to invest in the country’s fabled “Mittelstand” — family-owned small and medium-sized companies that are facing a generational shift."}],[{"start":169.9,"text":"Europe’s biggest economy has taken inspiration for the October summit from similar initiatives in other countries, including French President Emmanuel Macron’s “Choose France” conference, which produced a record €93bn in investment commitments earlier this year."}],[{"start":185.75,"text":"The German government is expecting up to 200 investors to attend, including Goldman Sachs chief executive David Solomon and BlackRock boss Larry Fink, who once employed Merz as the firm’s chair for Germany. "}],[{"start":199.3,"text":"Reiche, a member of Merz’s centre-right Christian Democratic Union party, stressed that Germany remained, despite its current weaknesses, an “industrial powerhouse”, boasting competitive “industry networks”, “cutting-edge research” and a “highly skilled workforce”."}],[{"start":null,"text":"

"}],[{"start":215.25,"text":"“It is the first time we [in Germany] are selling our star power. The government for the first time sees a necessity in doing this and in offering business opportunities, not only state-driven but leveraged by private capital,” she said."}],[{"start":230.1,"text":"US investors, Canadian pension funds and infrastructure groups, as well as investors from the Gulf, Singapore and Japan, have already expressed an interest in backing projects in the country, according to Reiche."}],[{"start":242.15,"text":"Global money managers were also looking “very closely” at the Merz government’s “reform agenda” and acknowledged “the steps we have made”, including its plan to add a capital markets element to Germany’s state-run pension system, she said. "}],[{"start":257.05,"text":"“Their concern is how the reforms will go further,” Reiche said."}],[{"start":260.8,"text":"At home, a number of prominent CDU politicians as well as Social Democrats have started to question parts of the planned pension reform, in particular axing early retirement incentives for workers with 45 or more years of employment history, raising doubts about the government’s ability to implement it as planned."}],[{"start":278.75,"text":"Despite such concerns, Reiche stressed that many investors she had talked to were looking beyond the immediate political and macroeconomic challenges. “They look at the business case of companies [and] the value they find here.” "}],[{"start":291.9,"text":"Germany’s domestic perspective on its corporate sector can be too pessimistic, she argued. "}],[{"start":297.45,"text":"“Sometimes we tend to forget our strengths,” she said, adding that, “surprisingly”, international investors have a clearer view of them. "}],[{"start":305.9,"text":"At October’s conference, investors will meet Merz, finance minister Lars Klingbeil, Reiche and several other top ministers at the ESMT Business School next to the foreign ministry and the rebuilt Berlin palace. "}],[{"start":319.25,"text":"“We will have a line-up [of top government ministers] of half a soccer team showing up,” said Reiche, stressing that the coalition was aligned over the investment agenda. The CDU, its Bavarian sister party CSU, and Social Democrats, which form Merz’s coalition, “are showing their commitment at this conference.”"}],[{"start":346.85,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1786350709_4184.mp3"}