Right-wing party poised for electoral breakthrough in Germany

 At the inaugural convention of Germany's youngest party, the Eurosceptic Alternative fur Deutschland (AfD), earlier this year, an elderly man with a neat white beard unfurled a German flag and began waving it enthusiastically. It was an irresistible image. With party founder Bernd Lucke speaking in the background, the man quickly became a magnet for press photographers.

That was until a furious fellow member of the party ripped the flag from his hands in disgust. It was a neat illustration of the party's central dilemma. How to stand up for Germany's national interest without arousing old fears that German nationalism is on the march?

On Sunday, AfD, a party born out of anger over the eurozone crisis, hovers on the brink of an electoral breakthrough. A poll published on Thursday gave it a 5 per cent share of the national vote - the threshold needed to win seats in the Bundestag. While most other polls have put them at just slightly below that level, there can be no question that the party's rise has rattled the German political mainstream.

AfD is against the single currency, although it insists it is not anti-European Union, and its rise has drawn comparisons with that of Ukip in Britain. AfD argues that the euro threatens the EU's integration project because it impoverishes some countries with uncompetitive economies, while burdening others with the cost of bailouts and austerity measures.

The party primarily draws its support from the fear that the financial burden of successive bailouts will ultimately prove too high for the German taxpayer. At its first convention in April, Lucke, a boyish economist from Hamburg, told the crowd: "Does anyone believe that the people accepted the idea of paying for mismanagement in other euro-countries with hundreds of billions of euros?" The chief target of Lucke's rhetoric has not been ordinary Greeks or Spaniards but "American hedge funds, French banks, British insurance firms".

Ordinary people in Cyprus and Greece don't benefit from German taxpayers' money, he told supporters. "They just get a sniff of it - as if you could be satisfied by the aroma of a roast. The roast itself goes to the big financial investors." The AfD also wants an immigration system based on attracting skilled workers but, in an electoral landscape where every mainstream party is committed to the euro, its call for a dissolution of the single currency is its USP. Nicolaus Heinen, an analyst for Deutsche Bank, describes the AfD as the "great unknown" of Germany's elections.

Pollsters have indicated that the AfD's support may be higher than predicted, as its supporters may regard polling organisations as part of a distrusted establishment. Dr Heinen said: "AfD supporters are highly active in social media and street campaigning. We should not underestimate the potential of AfD voters to mobilise their families and circle of friends - that potential cannot be covered by opinion polls." In a tight electoral race, the AfD has come in for sharp criticism from Angela Merkel's Christian Democrats.

Wolfgang Schauble, the finance minister, attacked the party as a threat to German prosperity and added: "Anyone who starts, like the AfD, with stoking fears towards Europe, quickly moves towards stoking fears of immigrants." The attacks on the AfD have not been purely verbal. Last month, a group of far-Left activists knocked Lucke to the ground at a campaign stop in Bremen. Across Europe, anti-Establishment parties have surfed a wave of disenchantment with the European Union and the single currency.

Beppe Grillo and his Five Star Movement, which campaigned for a referendum on Italy's membership of the euro, made a breakthrough in Italy's elections this February; in Britain, Ukip won 23 per cent of the vote at local elections in May; in Greece, the radical left-wing coalition Syriza humbled the once-dominant socialist party Pasok. But Germany is different. It has been spared the pain endured by the southern countries of the eurozone. Its unemployment rate is the second lowest in the EU; its economy, the biggest in Europe, posted stronger-than-expected growth between April and June this year. Mrs Merkel routinely boasts on the campaign trail that her country is the "motor of growth, the anchor of stability."

The AfD has declared itself open to coalition talks with the CDU - though only in the unlikely event that Merkel's party abandons its policy of supporting the euro. While the AfD's direct impact on European politics will be limited, it could create "an important mouthpiece for eurosceptic positions in the German Bundestag," according to Dr Heinen.

"If the AfD entered into Parliament, the next German chancellor would certainly engage more in explaining the political need for continued euro bail-out policies to the electorate, in order to take the wind out of the AfD's sails," he said. The prospect of losing voters to the AfD may also strengthen euroscepticism within  Merkel's party.

Although within Germany's mainstream politics, there is little scope for criticism of the single currency, pressure from the AfD may make the CDU's leadership more reluctant to countenance further European integration.