In March 2025, the German Parliament approved two spending measures that surprised Germany’s European partners and international observers. The decision of the Bundestag and the Government is not only relevant for the German economy; it also has a significant scale and objective for the member countries of the European Union.

In fact, the announcement of the huge spending program was greeted with interest and sometimes with great appreciation outside the German borders. There are three essential  reasons for the favorable reception of the German program:

1) Given its size, the German spending program can be the first European response to growing global protectionism, at least partially offsetting the depressive effect on European demand caused by the US Administration's tariff policy.

2) Being oriented towards strategic sectors such as military infrastructure and digital modernization, the German program can limit the damage of the weaponization of strategic and digital supplies by China and the United States in a phase of worsening international relations.

3) Finally, by implementing a fiscal expansion without changing the European fiscal rules, i.e. by guaranteeing the European economy greater strength but not less stability, the German program can contribute to the role of the euro as a reserve currency in a phase in which conditions of uncertainty about the future credibility of the dollar are manifesting themselves.

Although these reactions are understandable, this policy brief will focus on how the motivations for the fiscal stimulus initiative must be sought (also) on a different level relating to the internal politics of Germany and more precisely to the risk that conditions of economic stagnation can strengthen the extremist right-wing Alternative für Deutschland (AfD) party, thus jeopardizing the democratic stability of the country.

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