Germany held a federal election on February 23, 2025. The outcome has raised alarm bells around the world as the far-right "Alternative für Deutschland" (AfD) party doubled its vote from the last election in 2021 to 21%. At the same time, the left-wing "Die Linke" party gained 9% of the vote, and the left-conservative "Bündnis Sahra Wagenknecht" gained just under 5% but failed to get seats in parliament. Germany has a proportional representation electoral system, but parties must receive at least 5% of the vote nation-wide, or three direct mandates, to enter parliament.

In the new 630-seat parliament, right-wing and left-wing parties will occupy 216 seats, that is 34.3%. This means that the parties of the middle cannot band together to pass a much-needed constitutional reform of the "debt brake" that holds Germany back from investing into its future. There remains hope that the outgoing lame-duck parliament can pass the required law before the new parliament is constituted no later than March 25. The Economist magazine argues strongly that Germany's election victor must ditch its debt rules—immediately. The urgency of this matter cannot be underestimated. Germany's outgoing parliament needs to act swiftly. Even if recalling parliament is unusual, the outgoing parliament has constitutional authority to act.

The outcome of the election has been polarizing. The map below shows the winners of each of the 299 electoral districts. Germans have two votes when they go to the poll: the "first" vote for a direct candidate, and a "second" vote for a political party. Ultimately, it's the second vote that determines the composition of parliament, and direct mandates are subordinate to that distribution under new electoral rules. There are in fact some winners of electoral districts that won't take seat in parliament because their party's number of direct mandates exceeds that party's number of allocated seats in a province. What the map below shows is the strong division across the old East-West border, with the exception of Berlin. The AfD party dominates Eastern Germany, while the Christian Democrats (CSU in Bavaria, CDU everywhere else) dominate most of Western Germany. Only a few urban areas in East Germany went differently, in some cases showing strength for the Left party (Die Linke).

The election has been a disaster for all four major mainstream political parties. The liberal party (FDP), previously part of the coalition government, failed to enter parliament. The social democrats (SPD) had their worst showing in modern history. The Green party (GRÜNE), which was in a coalition with SPD and FDP, lost votes, although not dramatically. Even the Christian democrats (CDU/CSU) can't be happy. A vote share of under 30% is not a strong mandate for the new chancellor Friedrich Merz. He will now seek to form a coalition with the social democrats of outgoing chancellor Olaf Scholz.

The next map shows this East-West division by focusing on the vote share (of party votes) of the far-right AfD. It is clearly the dominant choice in five Eastern states, with the exception of the city state of Berlin, a few surrounding areas in Brandenburg and a few urban centers. What has driven East Germans to favour the AfD? Since reunification in 1990, Germany's East has been in economic decline relative to the West. With the disappearance of economic opportunities, many capable workers have moved to a brighter future in the West, leaving behind weakened economies. Further population declines in Easter Germany are projected. Economic stagnation mixed with anti-immigrant sentiment is a toxic brew. The map below shows how Germany looks divided again, after 35 years of being re-united.

Anti-immigrant sentiment has played a big role in boosting the AfD's fortune. A car attack at Magdeburg's Christmas market on 20 December 2024, which left six people dead, only added fuel to the AfD's fire. Even though Germany's per-capita murder rate is just half of Canada's, and among the lower ones in Europe, it is perception that matters. Right-wing parties have a track record of stoking fears about crime to further their political objectives.

Tackling immigration issues will require a pan-European approach. Indeed, the European Union's Pact on Migration and Asylum will provide the much-needed focus on the EU's external borders, along with better collaboration and policy harmonization among EU countries. But the new system will only take effect in January 2026.

Let me turn to more of an analysis of key economic drivers of party preferences in Germany. Exit polls provide additional insights, including the observation that younger voters are drifting increasingly to parties of the far-right and left, while older votes stuck to the traditional parties. Using data from Germany's electoral office, I have run regressions of the vote shares for each party in the 299 constituencies on a set of economic variables: the logarithm of household income, the logarithm of population density, a dummy for whether a constituency is located in the former German Democratic Republic, and the share of foreigners in the population. Rather than showing the precise statistics in a table, I show the estimates for each regressor in a chart. The bars alongside the estimated points show the 95-percent confidence intervals.

Three parties have a positive income effect: the Christian Democrats, the Liberals, and Green Party do better in affluent parts of the country, whereas the Social Democrats are strongest in poor regions. As the model controls for the overall lower income in the old East Germany, the AfD, Left, and BSW parties all perform better in poor areas as well.

Results for population density reveal that some political parties are urban parties, and others tend to be more rural. The Social Democrats, the Green Party, and the Left Party, are clearly urban parties. The AfD does best in rural areas, while Christian Democrats are traditionally stronger in rural areas as well. The analysis above makes clear that the AfD draws political strength from poor rural areas.

Returning to the East-West Division, the fixed effect for a constituency being located in the former GDR shows huge differences. The AfD, as well as the Left Party and the BSW Party, are significantly stronger in the East. On ther other side, the Social Democrats and Christian Democrats are clearly doing much better in the West. In essence, Eastern voters seem to be looking for voices that express their local issues—but end up on the political fringe instead.

How the presence of a larger or smaller share of foreigners affects political preferences is not immediately apparent because there are competing effects. Spatial (regional) effects may also be more important than purely local effects. First, a larger share of foreigners can attune the local population to their presence, making them more familiar with customs and habits, and by and large improve acceptance. Call this the "familiarity effect". Second, a larger share of foreigners could make the native population feel more alienated, especially if new arrivals are poorly integrated and marginalized. Call this the "alienation effect". Which of these effects prevails is related to the proportion of foreigners in the population, but not exclusively, as it interacts with other variables.

In the data, controlling for the overall lower share of foreigners in the former East Germany, a higher share of foreigners seems to fuel the AfD share. A higher share of of foreigners coincides with lower vote shares for the Green Party and Social Democrats, but keep in mind that both are also urban parties where the shares of foreign population are higher overall. Most other parties do not reveal a statistically significant effect of the share of foreigners in the population. When I run a regression of the AfD vote share simply on foreigner share (without other variables), the effect is negative because there are far fewer foreigners in the former East Germany and in rural areas. The conclusions are far from clear. Yet, the immigration topic clearly resonates not only in Germany, but all around the Western world.

The AfD's spiteful attitude towards immigrants is also irritatingly out of touch with the reality of the German economy and underlying demographic trends. Germany actually needs immigrants! The demographic trends show a declining birth rate, visualized here. Immigration can make up for it, and in fact Germany has experienced positive net migration. The problem, visible in the linked-up chart, is the choppiness of the process following the 2015 and 2022 influx of refugees from Syria and Ukraine. Societies are better at integrating immigrants at a steady rate rather than in large waves. But war refugees arrive during a time of crisis, and as it happened within a time span of just a few years. This has stretched resources. But make no mistake: immigration has been good for Germany. It has supplied a steady stream of new workers along with many new culinary delights, and a more cosmopolitan flair in many cities. And the OECD Report on the State of Immigrant Integration in Germany 2024 shows that immigrants are indeed thriving in Germany, with high employment rates, strong language acquisition, and generally supportive integration policies.

Going forward, Germany will need to defend its democracy against internal and against external threats. After the February 28 incident at the White House, there can be no doubt that Europe needs to chart a new course to a self-sufficient defense capability. In a world where the US president cozies up to the Russian president and throws Ukraine under a bus, America can no longer be trusted to be the defender of democracy and freedom in the world. That role, now, falls to Europeans. Or as The Economist put it: Western leaders must seize the moment to make Europe safe. No doubt, Germany's new chancellor will have momentous decisions to make in the next months. I wish him well.