Eastern Germany to receive special focus in new infrastructure fund investments – finance minister

The new German government is aiming to increase investments in eastern Germany, where political opposition to current energy transition and climate policies has grown disproportionately in recent years. Taking part in the Eastern German Economic Forum in Brandenburg, finance minister Lars Klingbeil (SPD) said the region would receive special attention from his ministry when making decisions regarding upcoming infrastructure investments, Frankfurter Allgemeine Zeitung reported.

"It concerns the entire country, but there are particular challenges in the east," Klingbeil said. At the same time, there is great untapped potential in the region bolstered by the many skilled workers, entrepreneurs, technical know-how and more flexible structures that favour innovative business models, he added. In addition to government investments, Klingbeil announced tax incentives for private investments.

The government’s focus on eastern Germany follows the growing success of the right-wing AfD party, for which support is especially strong in the formerly communist eastern states. The AfD, which earlier this month was designated as right-wing extremist by Germany’s domestic intelligence agency, squarely rejects the government’s climate and energy policies and also often opposes the concrete implementation of measures at the local level. Despite persisting socio-economic differences between east and west since German reunification 35 years ago, eastern states have become a growth driver for the country and are set to outpace the national average growth rate this year, according to economic research institute ifo.

Eastern Germany is also seen as a pioneering region in the deployment of renewable energy and now supplies about 30 percent of the country’s renewable power while hosting only 15 percent of the population. A recent survey among eastern state business leaders found that more than half of them considered the region's economic potential to be "high" or "very high", with renewable energy seen as the brightest future growth sector.