East German leader demands more federal aid as data shows some uptick

Yahoo

18-05-2025

The state premier of Mecklenburg-Vorpommern has called on the new government of German Chancellor Friedrich Merz to take decisive action to kick start the sluggish economy.
"No economic growth for the third year in a row – that's not acceptable," said Manuela Schwesig, of the centre-left Social Democrats, at the opening of the annual East German Economic Forum, this time in the town of Bad Saarow.
But an economic report presented at the forum showed some positive signs for the east German economy.
Eastern Germany has made notable gains in economic performance, research and quality of life, but still trails structurally behind the west, according to a study by the ifo Institute in Dresden for the Central German Foundation for Science and Education.
The study compared the economic, social and scientific development of east and west Germany based on around 170 indicators.
It also highlighted differences within eastern Germany itself, showing that the region is not a homogeneous economic area but is characterized by regional strengths.
Schwesig identified lower energy prices, increased investment and reduced bureaucracy as key priorities, emphasizing that getting Europe's biggest economy back on track should the top political goal.
In addition to permanently offering affordable energy for both businesses and consumers, she urged the federal government to introduce "fair grid fees that reward regions investing in renewable energy rather than penalising them."
Regional economic differences
The ifo report showed some regional strengths in east Germany, though Schwesig's Mecklenburg-Vorpommern, a comparatively poor region, was not highlighted.
For example, Saxony's export rate of 32% exceeds the west German average, while Thuringia's industrial share matches that of Bavaria.
Berlin and Saxony also stand out in research spending, ranking among the top regions in Europe.
Overall, eastern Germany's economic performance, measured by gross domestic product (GDP) per hour worked, stands at 86% of the west German average.
Between 2019 and 2024, annual economic growth in the east outpaced the west by 0.3%, largely attributed to Berlin's economic boom.
Lower immigration but higher real wages
The monitor also highlights challenges: the proportion of foreign residents in the east is significantly lower at 7.2% compared to 15.6% in the west.
However, real wages in the east exceed 90% of the west's level, thanks to lower living costs.
The report was presented at the forum by the "Saarower Kreis," a group of east German economic stakeholders aiming to provide fact-based impulses for structural policy.
"Eastern Germany is not a homogeneous weak zone but a laboratory for the future," spokesman Frank Nehring stated. He added that the region needs more confidence in its strengths and the courage to think innovatively in economic policy.
At the three-day conference, business leaders are to discuss the challenges facing eastern Germany as a business location with members of Merz's new conservative-led coalition government.
Companies have long complained about high energy costs, a shortage of skilled workers, heavy tax and social security burdens and excessive bureaucracy.