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After three decades and trillions in investment, East Germany still trails West

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After three decades and trillions in investment, East Germany still trails West

Germany remains divided
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Eastern Germany is still trailing behind the West and progress has stalled according to a new report.

Nearly 30 years after the fall of the Berlin wall - fears are growing that the East of the country is losing the race to stitch up the division.

The release of the annual ‘Unity’ study by the German government has shown that wages are still far lower in most Eastern states when compared with the West. Averaging around 15% lower than the west which for many indicates that the growth bubble may have burst.

The report comes nearly three decades and trillions of Euros marked to bring the two parts of Germany in line with each other. Western states have paid their dues to bring the East up to their level, economically. Taxes are notably higher in the West – something that many political figures have criticised. Finance Minister for the state of Hesse Thomas Schäffer said “we in Hesse feel solidarity, but we are not stupid [..] The volume of money is taking staggering proportions”.

But it isn’t all doom and gloom for the Europe’s economic powerhouse --there has been marked success, Gross Domestic Product output in the East – which measures how much the economy is growing – shows a 41% increase since the reunification in 1991.

Later today the German government will underline its commitments to boost East German economic capacity. It is expected to include wide-ranging investments from infrastructure to industry in a hope to lure Western companies into the East. This is something the government will obviously be very keen to do if it’s to solve the brain-drain problem it has seen in recent years. In 2016, over 400,000 East Germans moved to the West for work versus 150,000 the other way.

Social disparities by the economic gap and unemployment rates of nearly 9% - far-higher than the national average of 6.8% have left a feeling of despondency in Eastern states where far-right populist parties have also managed to make a lot of headway.

Germany’s opposition party AfD (Alternative for Germany) have recently overtaken Chancellor Merkel’s CDU party in opinion polls. The party which run on an anti-migrant platform have been making gains in the East for years despite the fact that migration to those regions is far lower than elsewhere in the country.

However, fears that anti-migrant sentiment is growing may be soothed with this report. Both nationwide and in eastern Germany there has been a sharp reduction in extreme right-wing violence over the last year despite the recent spate of well-publicised protests in Chemnitz.