The Far Right opposition to the euro in Germany has nothing to do with MMT

Edward Elgar, my sometime publisher, is interested in me updating my 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale (published May 2015). I have held them off for a few years because there have been notable developments such as Brexit, COVID-19, and more since I finished that work, which are still playing out and difficult to disentangle in such a way that definitive analysis can be made. One of the striking things about Europe, from my perspective, is that voters appear to have separated the growing economic stagnation and the insecurity it brings from their view of the euro as a currency. The most recent – Standard Eurobarometer Survey 102 (conducted in November 2024) – conducted by the EU itself, “has registered the highest support ever for the common currency, both in the EU as a whole (74%) and in the euro area (81%)”. (85 per cent support in Germany and 76 per cent in France). Given the circumstances that is a pretty stunning result. And more respondents thought the EU economy was ‘good’ than those who thought it was ‘bad’, although in Germany and France, the outlook in that regard is highly pessimistic (40 per cent good Germany, 29 per cent France). Yet, the Far Right party in Germany – Alternative für Deutschland (AfD) – which as a result of the national election on February 25, 2025 gained the second highest number of votes (20.8 per cent of total) and improved its voting outcome by a staggering 10.4 per cent. Interestingly, from my perspective, AfD is now the leading voice in Europe against the euro, while other Far Rights voices are no longer (Rassemblement National) or never have (Fratelli) advocated abandoning the euro in favour of a return to national currency sovereignty. So while most Germans like the euro, more are voting for AfD who want it scrapped. That tension is what I am researching at the moment among other things.

It is highly likely that we will never be able to separate the impacts of the pandemic from Brexit for the UK.

Not to be daunted however (why would anyone ever be) I have been researching various strands as I work out how I will update the analysis.

At the foundation of my work since the 1990s has been my view that the euro is based on a dysfunctional architecture that was created by neoliberals, which has served the interests of corporations and undermined the prosperity of the working class.

I still consider that to be the case even though recent events (Trump election, pressure from the Far Right, Putin, etc) have led to some fundamental shifts in rhetoric from the European leadership.

Also during the pandemic, the punitive fiscal rules were suspended and many progressives hoped that would augur more permanent shifts in economic policy thinking.

I doubt that is the case and the recent European Commission decision to reassert the – Excessive Deficit Procedure – I think backs up my judgement on that.

On January 21, 2025, the EU press release – Stability and growth pact: Council adopts recommendations to countries under excessive deficit procedure – announced that Belgium, France, Italy, Malta, Poland, Romania, Slovakia, were notified that they were in breach of the Stability and Growth Pact fiscal rules and should impose austerity measures to bring their fiscal balances back into line with those rules.

The deadline for conformity with the rules was different for each of those countries – varying between 2027 and 2030.

Hungary was added to the list on February 18, 2025 with a 12-month deadline imposed.

The latest Eurobarometer (No 101 Autumn 2024) contains several separate reports.

The report covering – Standard Eurobarometer 102 Autumn 2024 – asked among other things about support for “A European economic and monetary union with one single currency, the euro”.

81 per cent were in favour (Euro area), 74 per cent EU wide while only 16 per cent were against (Euro area), 23 per cent EU wide.

The Survey found that:

In 22 Member States (all 20 euro-area countries as well as Hungary, and Romania), a majority of respondents are for a European economic and monetary union with one single currency, the euro.

85 per cent in Germany supported the euro, 76 per cent in France, 75 per cent in Italy.

In 2005, German support was less than 60 per cent.

Of the euro nations, the lowest level of support was 73 per cent in Austria.

There is also growing support for more financial resources to be allocated at the EU level.

The report covering – Europeans and the EU budget – revealed that:

Almost half of the respondents (48%) agree that the EU should have greater means given its political objectives … Respondents living outside the euro area (52%, +4 percentage points) are more likely than those living in the euro area (48%, no change) to agree that the EU should have greater means given its political objectives.

The proportions agreeing are lower in Belgium, Portugal, Germany, Austria, Finland, France, among others than the EU average.

More respondents in Germany disagreed than agreed.

I could write more about this data but taken together the results present an interesting research question, particularly in Germany.

The German economy has stalled.

The latest data from the national statistical authority, Statistisches Bundesamt for the – Gross domestic product: detailed results on economic performance in the fourth quarter of 2024 – shows that the German economy contracted by 0.2 per cent relative to the September-quarter 2024 and by 0.4 per cent over the 12-month period to December 2024.

While the economy staggered to resume growth after the pandemic, since after the recovery, the December-quarter 2020, there has been virtually no growth at all.

The official unemployment rate has also been steadily rising since early 2022 and unfilled vacancies.

Which helps to explain the discontent that has pushed voters towards AfD.

But why would such a political swing occur when AfD is avowedly against the euro and a vast majority of Germans support the euro?

I have thus been considering the role that the Far Right is playing to destabilise the political situation and reduce the hold that the traditional ‘centre’ parties (right and left) have on the European debate.

Today, I consider the position of the AfD, which is now the most significant Far Right political presence, given its February election outcome and it is about the only Far Right party that maintains an anti-euro, restore national currency position.

The – Finns Party – the Far Right party in Finland, still advocates abandoning the euro and returning – see their – The Finns Party’s European Union Policy (as at January 21, 2019).

However, they are politically less significant overall in Finland than the AfD is in Germany.

Similarly, in Belgium – Vlaams Belang – have shifted positions regularly but are not seeking to eliminate the EU or return to national currencies.

In France, the Far Right have downplayed their advocacy of national currency restoration.

So I sought to understand what the AfD position is on the euro and consulted their election platform for the February election (written in German) – AfD Leitantrag der Bundesprogrammkommission – which was released for the 16th AfD Federal Party Conference held between January 11-12, 2025 in – Riesa – a town in the former East Germany.

The text is interesting and demonstrates that the AfD really do not understand the nature of currency and are opposed to the euro because they are paranoid about the behaviour of the ECB and the European Commission.

So it is not a Modern Monetary Theory (MMT) based criticism that leads them to oppose the euro but a nationalistic argument that the German polity will be more austere using their own currency than they would be using the euro, when the ECB and EC are also involved.

On Page 34 of that document, the AfD discuss Monetary policy and conclude that “the euro system is failing” (my translation).

The AfD asserts their neoliberal, free market credentials and argue that (translation follows original):

Die Stabilitätskriterien als Geschäftsgrundlage der Euro-Währung werden permanent verletzt, der Euro illegitim „gerettet“

The stability criteria that underpin the euro are being continually violated and the euro is being ‘saved’ illegitimately.

They argue that the common currency has allowed the EU to progressively become “einen EU-Zentralstaat (a central state) … on den europäischen Völkern nie demokratisch legitimiert worden” (without democratic legitimacy).

I agree with that assessment.

The European Commission and the ECB have enormous power and have used it to create a democratic deficit within the Member States.

The ECB has demonstrated it will threaten to breach its charter to maintain financial stability unless democratically elected governments toe the austerity line (Greece – June 2015).

Moreover, even though the ECJ has cleared the ECB of breaching the no bailout rules, the fact remains that its bond-buying program has been funding fiscal deficits across the Eurozone and keeping nations solvent, albeit through blackmail (the conditionality).

Where I depart with the AfD is in their assertion that the decision by the ECB to bailout Member States during the GFC, and later, the decision during the pandemic to initiate ‘debt mutualisation’ (EU-level debt) have marked a trend that is destroying the credibility of the euro.

They assert:

Die
Geschäftsgrundlage des Euro war spätestens seit der Euro- und Finanzkrise zerstört. Seit den Schulden-Vergemeinschaftungen sind die letzten Hemmungen zum Rechtsbruch gefallen.

The basis of the euro was destroyed during the financial crisis. Since the debt mutualization, the last inhibitions against breaking the law have fallen away.

It was these decisions that actually saved the euro and underpins its popularity.

Had the ECB not bailed out various governments, there would have been an almost certain break-up of the euro nations, perhaps with Greece and Italy being the first to go in 2012.

The AfD hate debt mutualisation – a typical stance by Germans.

But if the common currency has any long-term future that can deliver prosperity to the European people then strengthening the fiscal capacity of the Europe-level institutions will be a necessary condition.

While I do not expect debt mutualisation to expand and become an effective ‘federal’ practice and its current design is too compromised to be a model for the future, the fact that it occurred during the pandemic marked a small shift in thinking among the European elites.

Perhaps with all this talk of military spending a better approach to federal fiscal affairs will emerge.

But that would be the anathema to the AfD.

They correctly note that:

Der Euro ist für ein Wirtschaftsgebiet mit 20 sehr unterschiedlichen Volkswirtschaften eine Fehlkonstruktion und kann in dieser Form weder ökonomisch noch sozial funktionieren.

The euro is a flawed design for an economic area with 20 very different economies and cannot function economically or socially in this form.

But then assert their neoliberal tendencies:

Erwirtschaften muss wieder vor Umverteilen kommen.

Profitability must once again take precedence over redistribution.

The AfD hate any notion of assymetrical fiscal transfers within Europe – a typical German position.

They consider social policies that redistribute euros across the euro geography to help disadvantaged communities, especially those associated with immigrant communities, to be destructive of the German society.

An MMT position is that such transfers are necessary in a federal system and the fact that the European Commission has failed to embrace them to the level needed (in the face of German opposition) is a failure.

The AfD also wants to return to the days when the Bundesbank manipulated the exchange rate to ensure their export sector remained dominant.

A significant proportion of the currency instability in Europe during the pre-euro days after the breakdown of the Bretton Woods system can be traced to the recalcitrant behaviour of the German central bank.

Even when they agreed to symmetric foreign exchange interventions (selling marks to reduce its value in the face of massive German trade surpluses) they reneged.

I am sceptical of Germany’s future as an export dominant nation but the desire by the AfD for that nation to return to its bad old ways pre-euro is not something that I would support.

I wrote about that scepticism in this blog post recently – Germany’s sectoral decline and its obsession with fiscal austerity (February 3, 2025).

So while I agree with the AfD that “Deutschland muss aus dem Euro-System austreten” (Germany must leave the euro system), my reasoning is quite different.

They want abandonment because they want to avoid what they claim is excessive EU debt and the likelihood that Germany will have to shoulder the burden of that debt which is being used to facilitate profligate spending behaviour in other European nations.

They hate the EU grants and community funds and the bond-buying program of the ECB.

They claim that:

Jede weitere Teilnahme an der Dauerrettungspolitik kommt einer Insolvenzverschleppung auf Kosten deutscher Steuerzahler gleich.

Any further participation in the permanent bailout policy amounts to delaying insolvency at the expense of German taxpayers.

So they want to restore the national currency because they believe the German government would then be able to make decisions without EU interference and run austerity programs without fear of having to repay EU-level debt.

The MMT position on this is that by restoring the national currency, the German government can then align its fiscal policy to the democratic expression within Germany.

Which sounds similar to the AfD position on the surface but the dynamics underpinning the MMT view are entirely different.

Conclusion

I often get E-mails telling me that my advocacy of national currencies and the abandonment of the euro places me in the AfD camp.

Nothing could be further from the truth, even though, for different reasons, we both advocate the restoration of national currencies.

That is enough for today!

(c) Copyright 2025 William Mitchell. All Rights Reserved.