- 7 weeks ago
After years of economic stagnation, Germany is investing huge sums into modernizing its infrastructure and promoting climate-friendly technology. Will it be enough to turn the country`s economic fortunes around?
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00:00Germany is on a spending spree, investing hundreds of billions of euros in new infrastructure.
00:07I want to know where the money is going.
00:10I'll be visiting projects on the ground and asking,
00:13what does this historic stimulus mean for the country's future?
00:18Germany's grand infrastructure plan, coming up on Business Beyond.
00:24But first, how we got here.
00:26Here in Germany, many people feel things aren't working as well as they should be.
00:31Trains are persistently late.
00:34A bridge collapsed in the city of Dresden last year.
00:38And high energy costs are crippling key industries like steel, chemicals and cars.
00:44All this has made Germany less competitive.
00:47Now the new government says it's all about to change.
00:50It's earmarked 500 billion euros to spend on infrastructure and climate protection over the next 12 years.
00:58The priorities, modernizing the rail network, expanding clean energy and future-proofing hospitals, schools and universities.
01:09Germany's finance minister says he wants people to feel the changes in their everyday lives.
01:15We want to see it in their everyday life.
01:19Something changes.
01:21That the hole in the building that has been a nerve-to-run, that has been a nerve-to-run, that has been a nerve-to-run, that has been repaired for years.
01:23That has been repaired for years.
01:25That the school toilet, which can already be used for years, has been repaired.
01:30That is also the storage unit for electrical mobility.
01:34That the swimming pool can get a new bath.
01:36That the roads are sanated, the bridges are stabilized and that the glass-fasers cable is installed.
01:41it there's hardly anything more fundamental to most people's daily lives than getting from a to b
01:50for a long time german trains were renowned for their punctuality and efficiency not anymore
01:57last year more than a third of long distance trains did not arrive on time
02:02forcing rail operator deutsche band to pay out 197 million euros in compensation
02:08according to the company's internal report outdated infrastructure construction work
02:17and staff shortages were to blame now the government is committing billions to restoring
02:23the national rail operator to its former glory this is an example of how that investment looks
02:31i'm in buchan near the end of the line between berlin and hamburg where construction workers
02:35have been hard at work modernizing the tracks modernization here means fresh tracks new
02:42overhead masts and the construction of a new platform as well as that the old signal tower
02:48is going to be replaced by a new electronic one julian fasing is the project manager in charge
02:55of the modernization of the entire route between berlin and hamburg
02:59we're on our way through the station tunnel to take a tour of the old signal box that's recently been
03:22decommissioned the technology inside dates back several decades and was in use until a few months ago
03:31workers had to manually operate levers to move signals across the tracks
03:36now as part of deutsche band's modernization drive this signal tower is being shut down for good
03:44the new electronic system will be highly automated
03:47here on this wall you can see the messages left by the people who used to work in this old signal
03:54tower this one says it's the end of an era i'm going to miss this but we're told that all of the
04:00employees who had jobs here are going to get training to work in the new electronic signal tower
04:06and just in case you were wondering how their new workplace will look
04:12this is the new electronic signal box it's not ready for us to go inside yet
04:16but it's due to begin operation in may next year what's happening here in büchen is just one
04:23example of how germany's national rail operator is preparing to move into the future all over the
04:29country similar works are underway insiders are keen to stress things won't change overnight
04:36but they're on the right track especially when the money from the infrastructure and climate
04:40investment fund begins to flow
04:42another area where germany wants to invest big is clean energy
05:06energy at present renewables make up around a fifth of germany's primary energy consumption
05:15increasing that portion is a key priority for the government
05:21huge progress has already been made in electricity where renewables account for well over half of overall
05:28production but much still needs to be done to clean up other sectors
05:34like transport industry and heating
05:39one sector the government's been increasingly focused on is geothermal energy
05:44a renewable resource it's considered a promising heating alternative to natural gas
05:50i've come to the northeastern town of wagen home to germany's oldest geothermal plant
05:56this geothermal plant was built 40 years ago when this town was still part of east germany
06:02it's continued to operate since providing heat to some 1700 local homes
06:08here heat is harnessed by extracting hot water through deep geothermal wells drilled into the earth
06:16like much of germany's infrastructure the plant was in need of renewal
06:20last year renovation work was undertaken after a malfunction in the production well was discovered
06:26it
06:46at present geothermal makes up only a tiny portion of germany's heating needs but the climate
06:52crisis and the move away from Russian energy has sparked renewed interest in the technology.
07:22The German government recently issued a draft law aimed at speeding up the approval processes for geothermal projects.
07:52As is seen across many sectors, getting skilled staff isn't always easy.
08:02Saman Amir Hosseini is a drilling engineer from Iran who's made a career in geothermal energy in Germany.
08:09In Iran, your background was actually in the oil and gas industry, right? How different is it working with geothermal?
08:16In terms of drilling view, they are very similar. But as you know, because of their names, you can see that in oil and gas wells,
08:29we just produce oil or gas, but here is just about the clean water or brine.
08:35What do you think Germany needs to do to attract more people like you to come here and work?
08:40Maybe the government could provide more opportunities for foreigners to find jobs or maybe to make easier this getting visa process.
08:56For example, in my country, sometimes it's a bit difficult for people, for students to get their visa to come to Germany.
09:03Most of them are very motivated, hardworking, but because of this problem, visa process, they have some difficulties to come to Germany.
09:15Germany may be committing a whole lot of public money to improving infrastructure, but it's been keen to stress it needs private investors.
09:24One project that embodies that goal is Neukonnect.
09:30It's a huge undertaking involving the laying of 725 kilometers of land and subsea cables between Germany and the United Kingdom.
09:39Once complete, it will create the first direct power link between the two countries,
09:44allowing each side to transport their excess renewable energy according to demand.
09:49It's being financed by France's Meridium, Germany's Allianz Capital Partners,
09:54and Japanese companies Kansai Electric Power and Tepco Power Grid.
09:58Arnaud Grévaud is the CEO of Neukonnect.
10:02He says cooperation between the public and private sector has been key to its success.
10:07And also it was a project that has a huge political support on both ends.
10:13If I take the example of Germany, there was no regulatory framework for interconnectors developed purely by private investors.
10:25It did not fit with German law.
10:27So German law had to be adapted and there was a dedicated law that went through the Bundestag,
10:33which shows really that the government was really keen on making the project happen.
10:39The goal of the Neukonnect link is to make renewable electricity more efficient and ultimately cheaper too.
10:46For example, Germany is one hour ahead of the UK, meaning that by the time people typically start work,
10:53there's often excess electricity that can be sent to the UK,
10:57where people are just getting ready to pop into the shower and make their morning cup of tea.
11:01So sometimes when the wind farms in Germany, for example, are producing, the UK may be in need of energy and vice versa.
11:07We've made calculations and we think that by using better, better integrating,
11:14by a better integration of renewable energy, we could save up to 13 million tons of CO2
11:21over the first 25 years of the interconnectors life.
11:26So are we on the brink of a new golden age of German infrastructure?
11:30Maybe, but there are some caveats. Here are the top three concerns experts are raising.
11:36Number one, Germany is taking on too much debt.
11:41Number two, the funds won't be spent effectively.
11:45And number three, everything takes forever in Germany.
11:51Let's go through them one by one.
11:53First, debt. Something Germany has a complicated relationship with.
11:57When he came to power, Chancellor Friedrich Merz made a big policy U-turn,
12:02scrapping Germany's strict limits on government borrowing known as the debt break.
12:07Those rules had been in place since 2009 and were intended to prevent the Eurozone experiencing another debt crisis,
12:15solidifying Germany's role as the financial anchor of Europe.
12:19Now, all of a sudden, the country's got hundreds of billions of euros to play with.
12:25An ideal chance to get out of its economic run, right?
12:29Well, not everybody thinks so.
12:31Some critics, including Germany's Federal Court of Auditors, say the country is taking on an unsustainable level of debt.
12:39In a recent analysis, it points out that one in every three euros the government spends is now going to be borrowed.
12:46Money that will have to be paid back with interest in the coming years.
12:52The Federal Court of Auditors declined an interview, so I asked renowned German economist Holger Schmieding if he shares their concerns.
13:00I would worry about it if this were to go on forever, forever and forever, yes.
13:06But Germany is in a fiscal position that is much, much better than the starting position of almost any other developed country in the world.
13:13In Germany, it looks likely that the ratio of public debt to GDP will rise from about 62% to some 78% in 10 years' time.
13:25Almost all other developed economies are far above 78%.
13:30The US is well above 100%.
13:31The same goes for France.
13:33The UK is close to 100%.
13:35So even with its ambitious plans to upgrade infrastructure and to be able to defend itself and Ukraine better,
13:42Germany would remain miles below the debt burden of other countries.
13:47Another criticism from auditors is that the government has created technical loopholes to make it look like it's meeting investment targets,
13:55while actually increasing spending on operating costs like maintenance and salaries.
14:00To make sure that the money is well spent, that these loopholes are closed or at least are reduced,
14:08so that most of the money really goes into the purposes of investment, defence, infrastructure,
14:14that is a good thing for the court of auditors to emphasise and emphasise again.
14:19OK, so the government needs to make sure the funds are actually going to infrastructure.
14:25But what about the fact that Germany is, well, Germany?
14:30Things here can be pretty slow.
14:33I must say I have not yet noticed a difference in my daily life.
14:37The railways, of course, are as unfunctional as they were before.
14:41It will take time for things to go get better.
14:44And the impression is that Germany is at least significantly slower than the US and the UK in spending the money.
14:51Still, Germany is trying to speed up procedures.
14:54So I think that by our own standards, which are slow, we are methodical.
14:59We have more regulations often or we try to abide by the regulations more thoroughly than many other countries.
15:05By our own standards, it will likely get better.
15:09But by standards in many other countries, it will still be slow.
15:13So what's the solution?
15:16We would need to see significantly more work, say on the highways, in the evenings, on weekends than we have before.
15:25We often sort of pass along one of these Baustern, the German word for it, for miles and miles and nobody is working on there.
15:34Whereas from London, I've lived there for a while.
15:36I know if something on the main arteries is clogged, then companies work more or less day and night to get it done as fast as possible.
15:46And that is something which Germany should copy.
15:49I wouldn't be against paying those firms and those workers a bit more money to make sure that the repairs of bridges,
15:56that the repair of the highway system is simply done at each Bausteller, at each location as fast as humanly possible.
16:04So things are happening. Railway tracks are being modernized.
16:10There's progress being made on clean energy and crucially on bringing electricity prices down via projects like Neukonnect.
16:17But the stakes are high. The country's economy is in trouble and things need to improve quickly.
16:24If they don't, Germany could face many more years of stagnation.
16:29Germany's new golden age of infrastructure may be within reach.
16:36But getting there will depend not just on money, but on momentum.
16:59So things have happened in the rest of the day, but I think it's a little bit more about the value of what you think is.
17:04We're all about the solid activity of the central line.
17:06We're at the beginning of the building a lot of people working out for a long time.
17:09And it is because there are only 730 people working out for the people who are paying attention.
17:11But when they need to use, they start getting the pressure off and not having to pay attention.
17:14But we think about the people that we have – the people that say that the people who are paying attention.
17:17They do not take on time to think that we can cashier too, but how do we get attention to the people that are Cool?
17:19In this sense, they may not be able to pay attention to the people that they work.
17:24But if they're able to pay attention.
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