Germany is investing €86 billion over the next ten years in its aging rail network. The hope is to shift Germans toward less carbon-intensive forms of travel.
The federal government will cover the bulk of the cost, €62 billion. Deutsche Bahn, the state-owned railway company, will pay the remaining €24 billion. The money will be used to update tracks, stations, signal boxes and energy supply systems.
The government also intends to cut fares by 10 percent for trips of 50 kilometers or more in order to incentivize the use of trains for long-distance travel.
With this package, Germany kills two birds with one stone: it modernizes its infrastructure while reducing carbon emissions.
If you’re trying to control housing costs in your city, don’t look to Berlin for inspiration.
The German capital is due to implement a five-year, across-the-board rent freeze in March. The measure is expected to save around 340,000 tenants money during that period, but it will come at the expense of housing affordability in the long term.
The German Economic Institute in Cologne estimates that Berlin’s policy will reduce the value of some properties by more than 40 percent.
A consequence of that will be underinvestment. The BBU, a trade association of developers in the Berlin and Brandenburg region, says its members expect to reduce investments by €5.5 billion and construction by a quarter.
German chancellor Angela Merkel is traveling to Moscow on Saturday, officially to discuss the conflicts in Libya, Syria and Ukraine, as well as the tension between Iran and the United States, with Vladimir Putin.
If the German economy does poorly, so will the eurozone’s. A mere .2 percent growth is projected for the first quarter of 2020. This should be a wakeup call to German policymakers.
There are the usual suspects: underdeveloped infrastructure, underinvestment in education, export dependency.
They all stem from Germany’s obsession with surpluses. Revenues generated by exports are not reinjected into the economy. Rather, they sit comfortably in savings accounts. This is the reason for negative interest rates.
Not spending money is one way to get rich. But to grow its economy, or prevent a slowdown, Germany must put its money to work: invest in education, infrastructure and public goods.
Its reluctance to do so affects everyone in the euro area. Germany accounts for nearly 30 percent of the eurozone’s GDP. If Germany spent more at home, it would reduce its current account surplus and increase demand for the products and services of other European nations. Read more “Germany’s Surplus Obsession Hurts the Eurozone”
Senators in the United States have approved sanctions against companies that are involved in building the Nord Stream 2 pipeline between Russia and Germany.
The sanctions, which President Donald Trump has yet to sign into law, are a last-ditch attempt to halt the pipeline’s construction, which the Americans argue will only increase Europe’s dependence on Russian gas and hurt Ukraine’s position as a transit nation.
For the first time in three years, the “Normandy Four” are due to meet in Paris on Monday.
This negotiation format, consisting of France, Germany, Russia and Ukraine, brought about the Minsk I and Minsk II ceasefire agreements in 2014 and 2015. Even though their implementation was incomplete, the Normandy Four was still seen as a somewhat successful example of multilateral cooperation.
Earlier this month, I argued that lurching to the left would be a risky strategy for Germany’s Social Democratic Party (SPD), but that the alternative — continuing to rule in a grand coalition with the center-right — is too.
A change could scare off centrist voters, who have an alternative in Angela Merkel’s Christian Democrats or Germany’s pragmatic Green party. But the grand coalition has wearied leftists, who have an alternative in the Greens and the far-left Die Linke.
Germany’s Social Democrats (SPD) are increasingly forced into coalitions with the far left. Such pacts haven’t hurt their counterparts in Portugal and Spain, but Germany is a more conservative country with a politics of consensus and arguably less need for redistributive policies.