German infrastructure calls for overhaul | Company | Economic and Financial News from a German Perspective | DW
For months now, many in Germany have watched with envy as the United States makes great strides in vaccinating its population against COVID-19. Adding insult to injury, US President Joe Biden also recently unveiled a plan to invest $ 2 trillion in the country’s infrastructure. As the federal election season begins in Germany, the move draws attention to a sore spot for many Germans.
Many have complained for years that Germany is suffering by not investing more in infrastructure. In the World Economic Forum’s 2019 Global Competitiveness Report, Germany fell four places from the previous year, dropping from third to seventh place.
Rail and road
Decades of neglect and growing demand have left much of Germany’s complex network of roads and railways to be rehabilitated. German highways and rail lines are overloaded with today’s traffic volume. In metropolitan areas, traffic jams and train delays are common. Travelers are used to weighing the risk of spending hours trapped in traffic against the likelihood of train delays. According to a recent survey by broadcaster SWR, 40% of Germans also believe that the government has not done enough for cyclists.
People’s mobility in Germany is expected to increase by more than 4% by 2030 compared to 2017, according to a 2019 report from the daily business Handelsblattand the volume of freight transport is expected to increase by 25%.
The federal government has sought to address these issues in recent years with the Federal Transportation Infrastructure Plan. This increased spending on transport infrastructure provides funding of 270 billion euros ($ 324 billion) to improve roads, railways and waterways over the next 10 to 15 years. The “Digital Rail Germany” project, launched in January 2020, aims to increase the performance of the German rail network by up to 35%. But the digitization of the German transport network will depend on the country’s realization of a transition to 5G broadband which is still underway.
Bridges and waterways
About 11,000 of Germany’s 25,000 railway bridges are over 100 years old. About 4% of them are in unsatisfactory condition and represent a rehabilitation value of 7.3 billion euros, according to 2021 reports from the Behoerden Spiegel website, citing data from the federal government.
Germany’s waterways tell a similar story: many bridges, locks and dams are old and in need of repair. The Federal Association of German Inland Navigation (BDB) has complained that its annual budget is 200 million euros less than what is needed to maintain the rivers and canals used for transport, according to NDR reports .
In April, the government and Deutsche Bahn announced a funding agreement providing for the “full or partial renewal of a total of 2,000 bridges”. About 9 billion euros are spent on these renovations, which must be completed by 2029.
Despite its status as one of the most advanced economies in the world, slow or spotty internet connectivity remains a frustration in Germany. Even without a pandemic, demands for digital infrastructure are expected to increase dramatically in the coming years, driven by the advent of autonomous driving and the digitalization of the industrial sector, known as Industry 4.0.
“Digital infrastructure in particular is increasingly becoming a prerequisite for innovative technological applications and new business models”, Handelsblatt report said.
In January, telecommunications companies Deutsche Telekom and Telefonica / O2 announced that they would cooperate to shut down several hundred so-called “gray dots” in Germany. Gray dots are areas where only certain internet companies provide internet, which limits internet access to their customers. The cooperation aims to complete the coverage of the 4G network in Germany by the end of 2021.
In March, Deutsche Telekom said it currently provides 5G access to 80% of Germany and plans to expand it to 90% of the population by the end of the year.
For years, the German federal government has adhered to spending policies guided by “black zero”, a commitment to a balanced budget and not to incur new debt.
While this strategy may be second nature to a company afraid of taking out loans, it has in practice led to a significant lack of investment in infrastructure.
On the one hand, years of squeezing money have allowed the EU’s largest economy to unleash huge waves of financial relief after the coronavirus pandemic hits. On the other hand, the country’s digital infrastructure was ill-equipped to cope with the sudden surge in demand as schools and workplaces went online. In particular, utilities, long known for having a lot of paperwork and using late technology, have been criticized for not adapting to the exceptional situation presented by the pandemic.