GO
Loading...

Germany’s Roads Are its Secret Achilles Heel: Economist

Kiran Moodley, special to CNBC.com
Wednesday, 8 May 2013 | 10:22 AM ET
Sean Gallup | Getty Images

Germany's road infrastructure is crippled by mishandling more common in a communist state than a free-market one, according to German economist Hans-Werner Sinn.

"The extent of the economic mismanagement on German roads, with obvious bottlenecks and poor coordination, contrasts starkly with the otherwise smoothly functioning economy that Germany is admired for around the world. It is more reminiscent of the communist economy than of a market-based economy," said Sin, the professor of economics and public finance at the University of Munich, who also heads the Ifo Institute.

(Read More: Euro Area Economic Situation Worsens: Ifo)

Sinn cited research by the Cologne Institute for Economic Research which showed that 21 percent of federal roads and 9 percent of highways require urgent repairs."Doing the full extent of the work needed to address the problem would double today's annual repair costs for years to come," he said.

In addition,the ADAC, the German automobile club, found there were almost 285,000 traffic jams in Germany in 2012. "The time spent in these jams totaled 4.9 billion hours…this represents an annual financial loss of 126 billion euros [$165 billion]," said Sinn.

He added that with little money to fix Germany's roads,tolls are the best option to cut congestion and generate revenue to repair highways.

Featured

Contact Europe News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Europe Video

  • Jan Dunning, CEO of St Petersburg-headquartered hypermarket chain Lenta, says the situation in Ukraine has had no impact on the group, as consumer confidence remains unaffected in Russia.

  • Vincent Deluard, European strategist at Ned Davis Research Group, says the strong euro is a problem for the region's companies, especially for the large exporters.

  • European shares closed higher on Thursday as investors brushed aside concerns regarding Ukraine and focused instead on Wall Street earnings and the latest U.S. jobs data.