Berlin loses people

The most recent census (www.zensus2011.de) announced by federal and state statisticians will weigh heavily on the State of Berlin in the future. Instead of the 3.5 million residents officially claimed, the German capital actually has just 3.3 million.

That means 180,000 fewer people than previously assumed - a number certain to prove more than a statistical problem for state policymakers. "The dream that after the fall of the Iron Curtain, Berlin would grow to four or five million people is totally unrealistic," said Reiner Klingholz, director of the Berlin Institute for Population and Development.

Berlinremains 'sexy' - but even poorer

The population in some other German states has also been revised downward, resulting in Germany as a whole having lost 1.5 million inhabitants.  Apart from the loss of prestige for Europe's creative capital, the unexpected drop in population will cost Berlin something else: money. Fewer people mean that the heavily indebted State of Berlin can draw less money from the so-called German state fiscal equalization scheme. Through this system, wealthier states financially support weaker members of the German federal system.

In 2012 alone, nearly 8 billion euros were redistributed among the 16 states. The largest beneficiary was the State of Berlin with about 3.3 billion euros. The largest contributor was the State of Bavaria with nearly 4.4 billion euros. In March, Bavaria and Hesse filed a constitutional complaint. They seek a reduction in their solidarity payments for cash-strapped states such as Berlin and Schleswig-Holstein to gain more financial leeway for themselves.

The fact that Berlin, Germany's debt stronghold, has now lost about 5 percent of its population at a stroke plays into the hands of both of these states, since funding is based on per capita financial strength. When population drops drastically, as in Berlin, per capita tax revenue automatically rises. That means that Berlin, statistically speaking, has become richer overnight.

Record debt

The opposite is true in reality, however. The state continues to battle a record level of debt, compared to the other German states, and now it must expect lower funding from the state fiscal equalization scheme. "Berlin is the big loser," said Klingholz.

The Berlin state budget will be short about half a million euros in the future. On top of that come repayment claims of other states, estimated at about 1 billion euros. Earlier this week, German state representatives revealed that they are already holding closed-door talks about reforming the state fiscal equalization scheme.

"The numbers are a setback on our way to a balanced budget," said Berlin Finance Senator Ulrich Nussbaum in an interview with the Frankfurter Allgemeine Zeitung, adding that Berlin has no further breathing room. Nussbaum said "all options" must now be examined for Berlin to generate higher revenue. Among the ideas being discussed are a "bed tax" and a "city tax," which would impact mainly international tourists visiting the capital.

First census in unified Germany

Berlinhas little comfort in knowing that it is in good company: other states and cities have lost even larger percentages of their populations. Aachen recorded an 8.5 percent drop and Mannheim 7.5 percent. The census showed Germany's population shrinking from 81.7 million people to 80.2 million.

The difference, according to authorities, stems from the fact that there had been no census for the whole of Germany following reunification for fear of data protection problems. The last time the population was counted in the former Federal Republic of Germany was in 1987 and even longer ago - in 1981 - in the former German Democratic Republic.  

In the meantime, the official population statistics were simply updated. Births were added and deaths subtracted. People moving to Germany from abroad were added to the register and those who officially registered the fact that they had moved away were deleted. Statistical errors often resulted from people moving and not informing officials, according to Klingholz. "Especially when people leave Germany and don't register their move, their numbers, of course, remain in the statistics," he said. And without any corrections, those numbers added up to 1.5 million people over the years, he added.

Light at the end of the tunnel

Despite the statistical glitches and financial setbacks, Klingholz sees light at the end of the tunnel for the German capital. The city, he says, has become a magnet for artists and other creative people worldwide, as their growing numbers indicate. "Berlin," said Klingholz," is a moderately growing capital city and that is important in a country that will lose population in the medium term."