The Rise of the AfD
This post was originally published on jpfs.com
With the AfD making significant Political in-roads in Germany, which is a new bout of unapologetic German nationalism, the rest of Europe has been put on notice: Germany will not be dictated to by the EU.
Indeed, many of their members are openly stating they want to leave the EU and go it alone… So, let’s examine the potential disruption they may occur if they follow through.
A German exit from the EU and Eurozone (often called “Dexit”) would be far more disruptive for the rest of Europe than Brexit was. Germany is the EU’s largest economy, the biggest net budget contributor, the industrial and trade anchor of the single market, and the core credibility pillar of the euro. Most serious analyses treat a clean, orderly exit as extremely unlikely; the process would generate severe financial, economic, and political shockwaves.
Eurozone and financial stability
Germany’s departure would almost certainly trigger a collapse or radical reconfiguration of the euro. The currency’s strength and the European Central Bank’s credibility rest heavily on German economic weight and fiscal reputation. Capital would flee remaining euro-area countries toward a new strong German currency (a neo-Mark or equivalent), causing sharp depreciations elsewhere, soaring borrowing costs, and acute pressure on high-debt states such as Italy, France, Spain, and others.
Older stress scenarios (e.g., UBS analyses from the euro-crisis period) estimated large costs even for a “strong country” exit and far worse outcomes for weaker ones: banking-system stress, sovereign and corporate defaults, and the possible emergence of regional currencies (a harder northern bloc and a weaker southern one). More recent commentary still describes a German euro exit as potentially “the mother of all financial crises.” Legal experts note that current treaties make leaving the euro while remaining in the EU nearly impossible without also exiting the single market, compounding the disruption.
Trade, supply chains, and growth
Germany is deeply embedded in European production networks. A large share of other EU countries’ exports go to Germany or depend on German intermediate goods and final demand (machinery, automotive components, chemicals, etc.). Reimposition of borders, tariffs, regulatory divergence, and currency volatility would slash intra-European trade volumes – estimates in disintegration studies often put the hit in the high teens to around 20% or more for goods in affected sectors. Smaller, more open, and eastern European economies would be hit hardest relative to their size because they rely disproportionately on the single market and German demand.
The loss of German market access and supply-chain reliability would transmit recessionary pressure across the continent. Germany itself would suffer heavily from an appreciating new currency that damages its export model, but the reciprocal damage to its trading partners would be substantial.
EU budget and fiscal transfers
Germany is the largest net contributor to the EU budget (recent figures show net payments in the range of roughly €18–20 billion per year, or around 0.4–0.45% of its GNI). Its exit would force the remaining members either to raise their own contributions sharply or to cut spending on cohesion policy, agricultural support, research, and other programmes. Net-recipient countries in Central, Eastern, and Southern Europe would feel this most acutely.
Political and institutional consequences
The EU’s core political engine has long been the Franco-German partnership. Removing Germany would leave a power vacuum that France alone cannot easily fill, especially given France’s own fiscal and political challenges. The project of European integration itself would face an existential crisis: confidence would collapse, Eurosceptic forces elsewhere would be emboldened, and the risk of further exits or paralysis would rise sharply. Some northern economies might seek to align with a new German currency or economic area, accelerating fragmentation.
Geopolitically, a diminished or fractured EU would have weaker collective weight in relations with the United States, China, and Russia, and less capacity for coordinated responses on defence, energy, or migration.
Scale of the shock
Quantitative studies focus mainly on Germany (e.g., IW Cologne estimates of ~5.6% lower GDP after five years and millions of jobs at risk; WIFO/INSM work showing annual real-income losses on the order of €200 billion for Germany). These already imply large negative spillovers. Broader disintegration modelling shows manufacturing and trade-intensive sectors across Europe suffering double-digit export declines if key integration steps are reversed. The overall picture is one of mutual heavy damage rather than a clean win for any remaining members.
In short, the rest of Europe would face a combination of currency crisis, trade and supply-chain disruption, fiscal shortfalls, institutional breakdown risk, and weaker global standing. The costs would be largest and most immediate for closely integrated neighbours and for highly indebted southern and eastern members, but the entire European economic and political order would be shaken.
Bottom-line, if Germany goes, so does the rest of Europe.
We could be heading for a blood bath!
Please note the political opinions expressed above are those of the author himself, and do not necessarily reflect the opinions of JP Fund Services AS.
The post The Rise of the AfD first appeared on JP Fund Services.
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