Berlin’s economy: The hole in the middle
A reviving capital still has far to go—not least in integrating its immigrants
A CENTURY ago the art historian Karl Scheffler called Berlin “a city condemned forever to becoming and never to being”. When the Wall was torn down 21 years ago this week, Berlin seemed condemned forever to being poor as well. It struggled with the legacy of division and the end of subsidies from both east and west. “The ten-year decline was a problem,” comments Karl Brenke of the DIW economics institute. This was the 1990s, when GDP steadily shrank, leaving Berlin nearly bankrupt. Yet he notes that this had advantages: sweeping away inefficient industries and driving down living costs. That pulled in a new, young workforce and boosted services, where over 250,000 new jobs have been created since 1991. The service sector now accounts for over 80% of employment, a share that helped Berlin to escape the worst of Germany’s recession in 2009.
Figures from DIW show that between 2005 and 2009 Berlin’s economy outstripped the rest of the country’s, growing by an annual average of 1.7%, the highest of any German state. Yet although Berlin is catching up with established commercial centres in the old West Germany, it is still the only European capital poorer than the country it rules. Unemployment, at 14.1%, is almost twice the national average. …
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