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Extremism endangers Germany’s prosperity, warns central bank chief

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The current rise of right-wing extremism in Germany poses a threat to the country’s prosperity, central bank head Joachim Nagel has warned.

“I appeal to everyone not to take the threat of right-wing extremism lightly,” Nagel, 57, told the newspapers of the Funke media group on Saturday. “Right-wing extremists also scare off investors and skilled workers from abroad. That threatens our prosperity.”

Nagel, like many people in Germany, was voicing concern at the recent string of election victories for the far-right, anti-immigration party Alternative for Germany (AfD).

Profiting from anxiety among many German voters over rising numbers seeking asylum in the country, the surge of the AfD has led to fierce debate in society at large. Thousands of people joined anti-extremism demonstrations all over the country in recent months.

As a citizen, Nagel said he too was very concerned about the developments. “That’s why I recently took part in a rally for democracy in Frankfurt for the first time in my life.”

The president of the Bundesbank said he did not want to minimize the enormous challenges facing the country, and also appealed to business organizations not to talk down the economic situation.

“But we shouldn’t make the situation worse than it actually is. Otherwise nobody will come to Germany and invest. We are not the sick man of Europe,” emphasized Nagel.

He went on the say that he is not satisfied if the economy only treads water this year. However, Germany is in a special situation because its large, open economy was hit particularly hard by the Russian invasion of Ukraine.

At the same time, Nagel pointed to the stable labour market, noting that “Germany has almost full employment.”

The banker still called for more ambition in terms of tax cuts and reducing bureaucracy. The Growth Opportunities Act contains less tax relief than originally planned, but it is now important to actually implement it, he said.

Germany’s Bundesrat, the upper chamber comprised of the leaders of Germany’s 16 states, passed the slimmed-down law on Friday.

The volume of tax relief had previously been reduced from the originally planned €7 billion ($7.5 billion) to €3.2 billion per year in the mediation committee of the Bundesrat and the Bundestag parliament.

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