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Polish influx boosts German border economy

Cheap rents and accessibility to both Poland and Germany has attracted a large influx of Poles in German border towns boosting the local economy.

Published: 29 June 2008 15:12 CEST

Take the community of Löcknitz on the German-Polish border in the south of Mecklenburg-Western Pomerania. Once a no-go area because of high unemployment, high exodus and far-right radicals, the municipality is flourishing because of its new Polish inhabitants.

At 3,200 inhabitants, the community has grown by 300 over the past two years ago. More and more children are being born, possibly due to the €500 that the mayor promises each new citizen.

Poland’s 2004 accession to the EU, together with the end of border controls in 2007 with Germany have helped Löcknitz and other neighboring communities to flourish in what was once a dying region.

More and more Poles from the nearby town of Stettin, which has 400,000 inhabitants, are happy to move a couple of kilometers west to Germany. Now Löcknitz has 220 Polish citizens, there are 650 in Löcknitz-Penkun and around 1,000 wer in the Uecker-Randow area nearby.

Löcknitz’s Mayor Lothar Meistring is particularly pleased with his little community’s success story. According to Meistring, Poles are attracted by the “comparably cheap accommodation of higher standards.”

Since Polish citizens discovered the town, Löcknitz’s local real estate association has profited. The company’s director Maria-Theresia Odendall said they have practically no empty properties anymore. At the beginning of 2007, they had 58 Polish tenants, now that figure has doubled.

The new Polish inhabitants also appear to have an entrepreneurial streak. Odenhall tells of one tenant planning to build a Casino, an ice-skating rink as well as a car showroom for luxury cars.

Indeed, the regional boom is attracting companies such as Fleischmannschaft AG, which produces spices in the Polish region of Swidwin. They are now opening a production line in Löcknitz within a few weeks, creating six new jobs.

Marcin Baryliszyn, the company director admitted that another reason for moving production to Germany was so they can put “Made in Germany” on their products. “If we put ‘Made in Germany’ on our products, we will be able to reach foreign markets” more easily, he said.

How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year.

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’, Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn.

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment?

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024 about 1 percent below the estimated structural level.

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending?

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”. The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”.

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025.

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023.

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write.

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers.

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.”

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