Germany’s Poorer Towns at Risk of Falling Even Further Behind Rich Cities

(Bloomberg) -- Germany’s blue-collar communities are at risk of falling further behind affluent cities like Munich, widening a gap between haves and have-nots that has already spurred the rise of populist politicians.

The disparity in wealth risks becoming self-perpetuating because cities like the former coal-mining center of Gelsenkirchen have less tax revenue and more social expenditures due to a high proportion of welfare recipients, according to a study by the Bertelsmann Foundation. Handicapped by a lack of funds, their per capita spending on infrastructure was less than a quarter of that of their rich counterparts.

“The gap between stronger and weaker cities has been widening for many years,” the study said. “People’s opportunities are more and more dependent on where they live. This can be measured by the dramatic differences in local budgets.”

Germany’s social stability has been challenged as wealth and opportunity becomes increasingly concentrated in big cities like Berlin, Hamburg and Frankfurt. Concerns about being left behind have spurred the rise of the far-right Alternative for Germany, which surged into parliament in 2017 as the largest opposition party.

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“Infrastructure as a prerequisite for economic growth and quality of life is declining nationwide,” and vulnerable areas could be hit disproportionately in the event of a downturn, the study said. “The crisis resilience of weak municipalities is low.”

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