German cities aren’t ready for future

Now that Germany has dodged a recession, political decisions on fiscal stimulus have been postponed. Yet the country’s employers and labor unions are still demanding an infrastructure investment program worth at least 450 billion euros over 10 years, not to give an immediate boost to growth but to keep the country competitive in the future.
The World Economic Forum (WEF) ranks Germany as the world’s seventh-most-competitive economy this year, down from third in 2018. According to WEF, its greatest weakness is in information and communication technology (ICT) adoption, where it’s ranked 36th in the world; only one German out of 100 has a fiber optic broadband subscription, compared with one out of 32 in South Korea.
In an episode, a state TV broadcast about a special government session on improving mobile coverage was broken off because of a bad connection.
But, surprisingly for outsiders, the authors of the report suggest only that the government spend about 20 billion euros over the next decade on improving the telecommunications infrastructure, mainly to plug coverage holes where private investment can’t pay off. The rest of the money is needed elsewhere.
The WEF describes physical infrastructure as one of Germany’s strengths, but Germans love to complain about it, mentioning, for example, that the average age of railroad bridges in their country is 60 years and that some 10,000 of them were built before World War I. Yet it’s not roads and public transport that require the most investment, either: The two institutes put those needs at 100 billion euros between 2020 and 2030.
The biggest single investment need comes from Germany’s municipalities. As the federal government and the states have consolidated their finances under Chancellor Angela Merkel’s government, introducing debt brakes and deficit-free budgets, not enough money trickled down to the local level.
Germany isn’t exactly in a state of disrepair. It doesn’t feel as though it is, even though potholed streets aren’t a rarity, trains often don’t run on time and cellular reception is spotty outside cities. Nor, however, does it feel future-proofed enough, even after a decade and a half of Merkel’s generally successful rule.
If Chancellor Merkel wants her Christian Democratic Union to win the 2021 election, and if Finance Minister Olaf Scholz wants his Social Democratic Party to have a fighting chance, both should give the proposal serious consideration: Voters may want to rise and shine from snoreland.

—Bloomberg

Leonid Bershidsky is Bloomberg Opinion’s Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru