Aerial view of a village on the subject of regional funding

© iStock.com/cinoby

The Federation and the Länder have agreed to ease the conditions for investment promotion under their Joint Task "Improving the Regional Economic Structure" (GRW). This marks another step towards implementation of the stimulus package and the top-up for regional business promotion funding by €500 million (€250 million each for this year and next) that is part of the package.

Said Economic Affairs Minister Altmaier: “As part of our stimulus package, we in the Federal Government have agreed to considerably top up the funds for regional support for business by a total of €500 million. Of this, €250 million is available for this year and another €250 million for next year. We want many investments to be made and jobs to be created soon, especially in the regions that are structurally lagging behind. This is why we are also easing the conditions for funding under our central instrument for regional business promotion, the Joint Task “Improving the Regional Economic Structure”. This will allow us to provide funding for even more projects and give the regions a fresh boost as they overcome the coronavirus pandemic.”

As of today, the following eased conditions apply for funding under the Joint Task “Improving the Regional Economic Structure” (GRW), which is operated by the Federation and the Länder:

  • The eligibility requirements for investment projects by commercial companies have been eased in terms of the required number of jobs created and the size of the investment volume: until 31 December 2021, GRW funding can be made available for projects that increase the number of jobs in the permanent establishment by at least 5% or projects whose investment volumes exceed the average write-offs made by the permanent establishment by at least 25%. This means that the effort required by companies has been halved compared to the regular requirements. This was done on account of the changes in the overall economic situation and allows the Länder to support a greater number of investment projects.
  • The maximum rate of assistance for investments in commerce-related infrastructure has been raised to 95% until the end of 2023, effectively halving the rate that needs to be borne by municipalities under normal circumstances. This will boost investments to make regions more attractive for investment and ease the financial burden on municipalities.
  • For a limited time, there will be greater flexibility with regard to project durations to account for delays caused by the coronavirus crisis.
  • The cap on funding for investments into environmental protection that goes beyond German and European standards has been permanently lifted. This means that regional funding rates no longer apply to environmentally-conscious investments, which makes these more attractive. It is now also easier for small and medium-sized companies to benefit from the funding.

Under its stimulus and crisis-relief package, the Federal Government wants to make available an additional €250 million for the GRW in both 2020 and 2021. This funding is to be used to support regional economic structures during the coronavirus pandemic. This tallies up to a total €850 million in federal funding, which is to be used to co-finance expenditure by the Länder in the same amount.

The Joint Task, which was set up decades ago, is a successful instrument of Germany’s regional policy and has helped generate growth and employment in regions that are structually lagging behind. A scientific evaluation of the Joint Task has shown that companies that have received funding under the instrument tend to grow more over the years than their peers that have not received such funding. Over the past five years, a total of €3.1 billion of funding was provided for approx. 7,450 corporate investment projects that have generated or safeguarded 227,000 permanent jobs. Another €2.2 billion was approved for investments to improve commerce-related infrastructure. The funding for regions that are structurally lagging behind is a contribution to the efforts to reduce the gap between different regions.

For further information on the Joint Task “Improving the Regional Economic Structure” (GRW), please click here.