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Infrastructure

IW think tank urges change in German investment policy

A leading German economic think tank has announced that massive investments in infrastructure are needed so as not to lose out to competitors. The institute found many companies were worried about possible disadvantages.

In its study released Monday, the Cologne Institute for Economic Research (IW) said despite a relatively good infrastructure many companies polled were increasingly worried about a deterioration of the country's road network.

They also voiced concerns about the future state of the energy grid, with the shift to renewables currently posing enormous problems and a necessary expansion of the network facing community-level resistance.

Companies also worried about broadband Internet connections not being created fast enough in all regions. About two-thirds of the 2,800 firms polled reported that they were already experiencing disadvantages as a result of infrastructure problems.

Major challenges ahead

The research institute calculated that all in all some 120 billion euros ($164.6 billion) would have to be invested into infrastructure over the next 10 years, to be spent evenly on road maintenance and extension, the broadband communications network and the national energy grid, with a major new north-south line.

Merkel sticks to renewable energy economy

"Germany's coalition government has earmarked 5 billion euros in infrastructure investments over the next four years," IW Director Michael Hüther said in a statement. "But 4 billion euros a year would be required to do a proper job," he added.

Hüther said policy priorities needed adapting in many areas. He argued that the state received 46 billion euros annually from fuel and automobile taxes plus a road toll scheme for trucks, accounting for 15 percent of the whole national budget. However, he criticized that only 7.3 percent of those revenues were channeled back into improving road infrastructure, with the rest being used to plug budget gaps elsewhere.

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