I’m sure it hasn’t eluded many people in the last few weeks. Germany is in danger of ending up in recession, and the government in Berlin is not doing enough to prevent it. According to the critics, there is too much fixation on reducing the government’s debt, while in the meantime infrastructure is collapsing, government buildings are rotting away and the speed of the Internet is still very slow.

Berlin must take out its wallet and be quick about it too. Otherwise, Germany will become the ailing figure in Europe once again.

Savings mania

The criticism is partly justified. You can dispute the deep-seated need to not spend more than what comes in. We have done that in the Netherlands as well, and the argument that we shouldn’t live off the backs of future generations, well, there is something to that too.

But it is incredibly frustrating that plans to improve the infrastructure are in place, but they are not being implemented yet because of too many complex regulations, bureaucracy and consultation procedures.

Nevertheless, it is wrong to have the impression that Berlin is doing absolutely nothing in order to keep Germany modern and innovative. This is evident, for example, in the opinion of the so-called ‘non-university research institutes’. These are Max Planck, Fraunhofer, Helmholtz and Leibniz: four institutions, each with their own specializations, which are invaluable to Germany as a knowledge economy. Although, in a broader sense, also for global climate policy, biodiversity and disease prevention.

The non-university research institutes are spread all over Germany.

120 billion euro subsidy

The non-university institutions do not have to deal with the education sector and are able to focus entirely on basic and applied research. They are therefore a useful complement to the regular universities. They are a frequent springboard for start-ups and businesses also benefit from their expertise. Moreover, they don’t have to worry about recessions, because the funding is secured by a new ‘Forschung und Entwicklung’ ( PFI, Research and Development) pact which the government drew up a couple of weeks ago.

“As far as we are concerned, the government has sent a strong signal with this pact,” says a spokesman for the Helmoltz Association in a reaction. “The new PFI will ensure that we get 3% more per year over the coming ten years.”

The Max-Plack Society also says it is extremely satisfied. “We will be able to plan our future without any concerns with this pact.” The PFI Pact is not new. The first pact was approved by Angela Merkel’s initial cabinet in 2005. According to the institutes, what is different about this pact is its duration. Previous PFI agreements always ran for four years. Now it is ten years, and it is not dealing in peanuts.

Approximately 120 billion euros in subsidies will flow from Berlin and the federal states to Max Planck & co up until 2030. This is a source of money that many foreign universities will be jealous of and it is completely independent of the economic situation. It is long-term planning at its best.

 

This is the first part of a series about a potential recession in Germany and the consequences this will have for innovation and R&D expenditure.

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