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.

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.


Swedish economy to grind to a halt as interest rates kick in

Sweden faces an economic slump next year that will see economic growth grind to a complete stop, Sweden's official government economics forecaster, has warned.

Swedish economy to grind to a halt as interest rates kick in

Sweden’s National Institute of Economic Research, which is tasked with tracking the business cycle for the Swedish government, warned in its quarterly forecast on Wednesday that greater than expected energy prices, interest rate rises, and stubborn inflation rates, Sweden was facing a significant downturn. 

The institute has shaved 1.6 percentage points off its forecast for growth in 2023, leaving the economy at a standstill, contracting -0.1 percent over the year. 

The institute now expects unemployment of 7.7 percent in 2023, up from a forecast of 7.5 percent given when in its last forecast in June.

“We can see that households are already starting to reign in their consumption,” said Ylva Hedén Westerdahl, the institute’s head of forecasting, saying this was happening “a little earlier than we had thought”. 

“We thought this would have happened when electricity bills went up, and interest rates went up a little more,” she continued. 

The bank expects household consumption to contract in 2023, something that she said was “quite unusual” and had not happened since Sweden’s 1990s economic crisis, apart from in the immediate aftermath of the Covid-19 pandemic. 

This was partly down to a five percent reduction in real salaries in Sweden in 2022, taking into account inflation, which the institute expects to be followed by a further two percent fall in real salaries in 2023. 

If the incoming Moderate-led government goes ahead with plans to reimburse consumers for high power prices, however, this would counterbalance the impact of inflation, leaving Swedish households’ purchasing power unchanged. 

The institute said it expected inflation to average 7.7 percent this year and 4.6 percent in 2023, both higher than it had forecast earlier.

Sweden’s Riksbank central bank this month hike its key interest rate by a full percentage point, after inflation hit 9 percent in August, the biggest single hike since the 1990s.