How do increasing unemployment risk inequalities amongst natives shape growing negativity towards immigration? Group conflict theory suggests that tension between immigrant and native groups arise as a reaction to the real or perceived loss of economic privilege by majority group members. Nevertheless, such an economic basis of the sentiments towards immigration is widely debated. This paper aims to clarify and more precisely assess economic threat mechanisms of inter-group conflict remedying limitations in earlier work. First, I investigate the elusive link between increasing fiscal and job market competition due to immigration and worsening group relations. Second, I argue that distinct from the economic effects of heterogeneity, being in a elatively worse-off position amongst in-groups is a separate channel worsening inter-group relations. To study these relationships, I use high-quality longitudinal household panel data (SOEP) from Germany from 1999 to 2016 and cross-sectional survey data from the German Social Survey (ALLBUS). Despite the contestation in existing work, I provide evidence suggesting that exposure to a higher risk of being substituted by immigrants and a higher risk of being fiscally burdened by foreigners turn natives increasingly sceptical towards immigration. Importantly, exposure to increasingly higher unemployment risks compared to other native workers in the host society raises adversity towards immigration. This effect is independent of geographic differences and actual exposure to the economic impact of immigration. Overall, the paper reconciles existing accounts of economically motivated group conflict. It brings forward a comprehensive theoretical framework and empirical evidence to the study of worsening reactions towards immigration in these past decades.