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Eastern Germany Faces Growing Economic Gap as Poland Pulls Ahead, Economists Warn
Eastern Germany is at risk of losing momentum in its long-running effort to close the economic gap with the western part of the country, while neighbouring Poland continues to record strong growth and attract rising investment, according to economists and a new competitiveness report.
The 2026 Competitiveness Report for Eastern Germany warns that the convergence process between east and west is “in jeopardy,” with the region facing weaker investment, persistent labour shortages and mounting demographic pressures. Researchers say the gap that narrowed for decades could begin widening again unless urgent action is taken.
Joachim Ragnitz, deputy head of the ifo Institute in Dresden and author of the study underpinning the report, said the situation has reached a turning point. He cautioned that eastern Germany’s economic catch-up can no longer be assumed and may stall without decisive policy and business intervention.
The report highlights that private investment in eastern Germany remains significantly below western levels. Between 2019 and 2023, investment per resident reached only about three-quarters of western Germany’s level. Excluding housing and public infrastructure, it fell to roughly two-thirds.
Demographic change is adding further pressure. The working-age population is expected to decline by around 7 percent by 2035, with sharper drops in some regions. Thuringia and Saxony-Anhalt could lose as much as a quarter of their labour force potential, raising concerns over production capacity and business continuity. In Thuringia alone, company closures outpaced new business formations last year.
Officials and economists argue that a shortage of skilled labour and weak private-sector investment remain central challenges. Elisabeth Kaiser, the federal government’s commissioner for eastern Germany, said targeted tax incentives and continued investment are essential to strengthening long-term growth prospects.
By contrast, Poland has recorded strong industrial expansion in recent years, attracting investment in sectors such as automotive manufacturing, logistics and battery production. Economists say Poland’s flexibility in shaping economic policy has been a key advantage.
Ragnitz noted that Poland can offer tailored incentives and regulatory conditions that are not possible within Germany’s unified legal and wage framework. He said eastern Germany’s integration into national systems limits its ability to compete on costs or design special investment zones.
After reunification, eastern Germany briefly benefited from enhanced subsidies and simplified approval processes, but many of these measures were later phased out due to policy changes and EU rules. Attempts to reintroduce similar frameworks have faced political resistance.
Despite this, several major projects have recently been secured in eastern Germany, including Tesla’s plant in Brandenburg, semiconductor investments in Dresden and battery production facilities near Erfurt. However, economists say these flagship developments have not yet translated into broad regional gains.
Wealth disparities also remain significant. Median household net worth in eastern Germany is around €35,900, compared with €143,200 in the west. Lower incomes, reduced home ownership and fewer inheritances continue to widen the gap.
While Germany’s overall economy shows signs of stabilisation, eastern states continue to lag behind in sectors such as industry, construction and retail. GDP per capita in the east remains about 85 percent of western levels.
Economists say the challenge now is not simply catching up, but redefining the region’s economic role. Attention is expected to focus on new growth strategies at upcoming policy forums, where Germany and international experts, including those studying Poland’s development model, will assess how to revive momentum in the east.
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Democrats Face Internal Battle Over Party Direction Ahead of US Midterms
With just over two months remaining before the US midterm elections, Democrats are facing a political challenge that extends beyond their efforts to oppose President Donald Trump. The party is divided over its policy direction, with progressives and moderates offering competing ideas about how Democrats can regain support.
The divide has become increasingly visible during this year’s primary elections. Progressive candidates have secured several notable victories, raising hopes among the party’s left wing. Moderates, however, are warning that candidates associated with the progressive movement could struggle in competitive districts and Republican-leaning states.
Both factions say the 2024 election defeat exposed weaknesses in the party, but they draw different lessons from it.
Progressives argue Democrats were too cautious and failed to offer voters a strong economic alternative. They want the party to focus on issues such as lower healthcare costs, higher wages, stronger unions and greater restrictions on corporate power.
Moderates say Democrats need to avoid positions that Republicans can portray as extreme. They believe candidates must appeal to independent and conservative-leaning voters, particularly in closely contested states.
Recent primary results have intensified the debate. In Florida, democratic socialist Angie Nixon defeated moderate Alex Vindman in the Democratic Senate primary. In Michigan, progressive Abdul El-Sayed defeated establishment-backed Haley Stevens, while in California, Aisha Wahab won a special congressional election after facing substantial spending from outside groups.
Progressives view the results as evidence that Democratic voters are becoming less interested in traditional party leadership.
However, winning a primary does not guarantee success in November. Florida presents a major test for Nixon because the state has shifted strongly toward Republicans in recent elections. Her nomination has already prompted debate among Democrats over whether the party should embrace the democratic socialist label.
At the same time, Democrats in Florida selected former Republican David Jolly as their candidate for governor, highlighting the ideological range within the party.
Polling suggests many voters support economic policies associated with progressives, including higher taxes on corporations and wealthy individuals, government-supported healthcare, paid family leave and a higher federal minimum wage. Yet support for these policies does not necessarily mean voters will choose candidates who identify as progressive.
Democratic voters can hold moderate political identities while supporting populist economic measures. Some cultural issues associated with the left have attracted less support among swing voters.
This creates an opportunity for Democrats to build an economic message centred on affordability and corporate power while avoiding divisive cultural battles.
Trump remains another major factor. Republicans are using progressive primary victories to argue that Democrats are moving toward socialism, while Democrats have an incentive to keep attention on Trump’s record and economic concerns.
The November results could shape the party’s direction well beyond the midterms. A strong Democratic performance could strengthen either moderates or progressives, depending on which candidates succeed.
The outcome may also influence the 2028 presidential race. For now, Democrats face a shared objective: defeating Republicans in November while managing a growing dispute over what the party should become.
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Two Killed After Car Deliberately Hits Pedestrians in Caen
Two people were killed and several others injured after a car was deliberately driven into a group of pedestrians outside a railway station in Caen, Normandy, French authorities said.
The incident happened near Caen railway station, where a vehicle struck people in a street opposite the station. Calvados prefect David Claviere said the driver had deliberately driven into pedestrians.
Seven people were reported to be in critical condition, while three others suffered less serious injuries. Emergency services and security personnel quickly responded to the scene, which was later sealed off as investigators began examining what happened.
According to French media reports, the vehicle was a black German-made car that struck people waiting near a tram stop. The incident reportedly followed an altercation, although authorities have not established a clear motive.
The suspect, a 26-year-old man born in Russia, fled the scene after the crash. Police arrested him later in the evening in Ouistreham, about 20 kilometres from Caen.
Authorities said the suspect was not previously known to France’s intelligence services. He was known to police only in connection with traffic offences.
Senior Caen security official Bruno Coutanceau said the victims were believed to be men between the ages of 17 and 40. Most of those injured were thought to be foreign nationals.
French authorities have opened an investigation into murder and aggravated intentional assault. Investigators are expected to examine witness statements, surveillance footage and other evidence to establish the circumstances leading to the incident and determine whether it was linked to the reported altercation.
The attack caused significant disruption around the railway station as emergency workers treated the injured and police secured the area.
Caen Mayor Aristide Olivier described the incident as an “absolute tragedy” and praised emergency and security services for their rapid response.
The authorities have not indicated that the suspect was linked to any extremist organisation, and his motive remains under investigation.
The incident has prompted heightened security around the station while investigators continue their work. Officials are expected to provide further details as the investigation progresses and the condition of those critically injured becomes clearer.
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SpaceX Announces $100 Billion Louisiana Starbase to Expand Starship Launches
Elon Musk’s SpaceX has announced plans to build its largest launch facility yet in Louisiana, a $100 billion project designed to support thousands of Starship missions each year and significantly expand the company’s presence beyond Texas and Florida.
The new facility, named Starbase, Louisiana, will cover about 125,000 acres, or 50,585 hectares, in the southern US state. Construction is expected to begin next year, with SpaceX targeting its first Starship launch from the site in 2029.
SpaceX said the facility would support missions to Earth orbit, the Moon, Mars and beyond. The project forms part of the company’s broader plans to increase launch capacity as it pursues ambitious goals in space exploration, satellite services and artificial intelligence.
The company said the Louisiana base would create more than 3,000 direct jobs. Louisiana Economic Development estimates that a further 8,100 indirect jobs could also be created through related economic activity.
According to the agency, workers at the facility are expected to earn average wages nearly three times higher than the current regional average. Officials said the project could establish Louisiana as a major centre for next-generation aerospace operations.
“The historic project will establish Louisiana as a global hub for next-generation aerospace, with the capacity and infrastructure needed to dramatically increase launch frequency and expand access to space,” the Louisiana Economic Development agency said.
The Louisiana site will share its name with SpaceX’s existing Starbase operations in Texas. In 2025, residents in part of Cameron County, where the company carries out testing and development work, voted to incorporate the area as a city called Starbase.
The announcement comes as SpaceX pursues an aggressive expansion strategy. Musk has outlined plans for missions to Mars, expanded Starship operations and major investments in artificial intelligence and computing infrastructure.
Earlier this month, SpaceX and Musk’s electric vehicle and robotics company Tesla announced plans to build a $16.8 billion AI chip manufacturing complex in Texas known as Terafab. The proposed facility is intended to support growing demand for computing power for AI, robotics and related technologies.
SpaceX is also facing increasing scrutiny from investors following its public market debut in June, when its shares began trading on the technology-focused Nasdaq in what was described as the largest stock market debut in history.
The company’s stock has fallen more than 30% from the highs reached shortly after trading began, although it remains above its initial offer price of $135.
Investors are now watching whether SpaceX can balance the enormous cost of its expansion with the need to deliver sustained profits. The planned Louisiana Starbase represents one of the company’s biggest commitments yet, with construction expected to begin in 2027 and launch operations scheduled to follow two years later.
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