Abstract
• Germany’s national economy is expected to contract in 2023 but experience growth in 2024-25. There remain significant structural economic differences between regions, although the traditional east-west divide has become more diversified.
• Reform of the extensive fiscal equalisation system came into force in 2020, shifting the focus from horizontal to vertical equalisation.
• Länder have primary responsibility for regional economic policy, but the federal constitution’s commitment to ‘equivalent living conditions’ is the basis for the main joint federal/Land policy instrument, the Joint Task for the Improvement of the Regional Economic Structure (GRW) which funds business investment, infrastructure and other measures.
• The federal budget for the GRW in 2023 is €647 million (matched by the Länder) and funding is also available through the other smaller programmes included in the federal support system for structural development regions. No regional policy instruments remain exclusively for eastern regions. Significant budgetary allocations are also available for coal transition regions and under a new special programme for east German refineries and harbours. Germany will receive ca. €20 billion under Cohesion Policy in 2021-27 period.
• The population coverage ceiling for the 2021-27 regional aid map fell to 18.1 percent (all ‘C’ areas). The domestic regional policy map also designates ‘D’ regions and overall the total population coverage of the new GRW map is 41.9 percent. The Cohesion Policy map remains largely unchanged with most eastern regions classified as Transition and western regions (with Leipzig and Berlin) as More Developed.
• A major reform of the GRW was agreed in December 2022 with increased emphasis on climate friendly investment and regional locational attractiveness. The nationwide federal support system for structurally weak regions was launched in 2020, incorporating over 20 federal programmes which give preferential treatment to domestic regional policy map areas.
• Reform of the extensive fiscal equalisation system came into force in 2020, shifting the focus from horizontal to vertical equalisation.
• Länder have primary responsibility for regional economic policy, but the federal constitution’s commitment to ‘equivalent living conditions’ is the basis for the main joint federal/Land policy instrument, the Joint Task for the Improvement of the Regional Economic Structure (GRW) which funds business investment, infrastructure and other measures.
• The federal budget for the GRW in 2023 is €647 million (matched by the Länder) and funding is also available through the other smaller programmes included in the federal support system for structural development regions. No regional policy instruments remain exclusively for eastern regions. Significant budgetary allocations are also available for coal transition regions and under a new special programme for east German refineries and harbours. Germany will receive ca. €20 billion under Cohesion Policy in 2021-27 period.
• The population coverage ceiling for the 2021-27 regional aid map fell to 18.1 percent (all ‘C’ areas). The domestic regional policy map also designates ‘D’ regions and overall the total population coverage of the new GRW map is 41.9 percent. The Cohesion Policy map remains largely unchanged with most eastern regions classified as Transition and western regions (with Leipzig and Berlin) as More Developed.
• A major reform of the GRW was agreed in December 2022 with increased emphasis on climate friendly investment and regional locational attractiveness. The nationwide federal support system for structurally weak regions was launched in 2020, incorporating over 20 federal programmes which give preferential treatment to domestic regional policy map areas.
| Original language | English |
|---|---|
| Place of Publication | Glasgow |
| Number of pages | 41 |
| Publication status | Published - 20 Dec 2023 |
Keywords
- Germany
- regional policy
- regional economic policy