Federal and state governments agree GRW reform

At a joint meeting in Berlin on December 13, 2022, the federal and state governments decided to reform the joint federal-state task of improving regional economic structures (GRW). The realignment is intended to adapt the GRW more closely to current challenges, particularly in the area of climate protection, but also in relation to demographic ageing. The GRW is the central funding instrument of regional structural policy in Germany. The aim is to promote economic development in structurally weak regions and thus strengthen growth and employment. The most important elements of the largest reform of the GRW include the following key points:

  • The creation of an expanded target system that no longer focuses solely on securing and creating new jobs. In future, three main objectives will apply:
    • Compensate for locational disadvantages;
    • Creating and securing employment, increasing growth and prosperity;
    • Accelerate transformation processes towards a climate-neutral and sustainable economy.
  • In future, the GRW will also focus on regional value chains and economic cycles, thus strengthening the basis for independent regional development. This means that the previous requirement that only companies that sell their products or services within a radius of at least 50 kilometers are eligible for funding no longer applies.
  • The expansion of opportunities to promote environmental protection investments with which companies go beyond national or EU climate protection standards is accompanied by easier funding requirements for climate-friendly investments and for research-intensive companies.
  • For the first time, aspects of “good work” are anchored in the GRW by expecting certain projects to be subject to collective wage agreements or to realize a certain wage growth in the course of the funding.
  • In the area of promoting business-related infrastructure, climate-friendly and sustainable measures are to be more strongly rewarded. In future, the continued use or conversion of industrial and commercial sites already in use will receive more support than the development of new sites. The same applies to the self-generation of renewable energies and other activities in the interests of a sustainable economy.
  • In addition, a new funding category has been introduced for measures relating to regional services of general interest, insofar as these are closely linked to the economy and make a significant contribution to the attractiveness of regional business locations.

The new GRW regulations (“coordination framework”) came into force on January 1, 2023. The federal states can now exercise a right to choose between the new and old regulations for a transitional period of one year before the new rules come into force in full. The new GRW coordination framework, including the regulations on the GRW special program “Accelerating the transformation in the East German refinery locations and ports”, can be accessed via this link.