After decades of disappointment, Berlin's economy looks up

Sun Jul 13, 2014 4:06am EDT
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By Stephen Brown

BERLIN (Reuters) - It has taken a quarter of a century longer than hoped but Berlin is now glimpsing the prosperity that was supposed to land in its lap after the Wall came down in 1989 and it was restored as the jubilant capital of Germany.

Twenty five years after reunification, Berlin remains a work in progress: with higher unemployment and lower income than the likes of Frankfurt and Hamburg, it will take years to catch up.

But its economy is growing faster than the German average and there are signs that Berlin is no longer a basket-case whose welfare dependency, lack of industry, poor infrastructure, high debts and pride at being "poor but sexy" - as the current mayor once said - make other Germans roll their eyes in despair.

Berlin does not dominate decentralized, federal Germany the way London or Paris do in their own countries. Generating just 4 percent of output, it cannot rival Bavaria or Baden-Wuerttemburg in manufacturing or Frankfurt for finance. Nor is Berlin's start-up scene likely to challenge Silicon Valley; but it can join the digital dots.

That chimes with Chancellor Angela Merkel's vision of the German economy keeping ahead of competitors in future by what she calls a "fusion of classic industry with the digital world".

"We won't be making cars like Stuttgart or Wolfsburg - but the bases of the technology," said the city's economy minister, Cornelia Yzer, referring to the headquarters of the German auto giants Daimler and Volkswagen.

Berlin is not devoid of manufacturing: Siemens makes gas turbines here and BMW makes motorbikes. But it has no DAX-30 blue-chip of its own and industry makes up just a tenth of economic activity - half the national level.

The real business buzz is around its universities, whose scientific alumni include Albert Einstein and Max Planck.   Continued...

A worker is seen behind scaffoldings at a construction site near the Fernsehturm television tower in Berlin July 7, 2014. Picture taken July 7, 2014.