From the end of the 19th century through the first half of the 20th century, Berlin boomed as Germany’s capital. But after the second world war the city became an economic basket case. What heavy industry wasn’t destroyed by Allied bombing was stripped by the Russians and sent back to the Soviet Union. The Cold War then turned West Berlin into a capitalist island surrounded by the Communist sea of East Germany. This led most big German firms – Deutsche Bank, Siemens, Allianz, AEG – to relocate most of their facilities and assets elsewhere for fear of losing everything should the Communists attempt to choke off West Berlin (as they did during the blockade of 1948-49). Without a proper tax base, this meant West Berlin survived for decades on large public subsidies from the West German government in Bonn. Once the Wall fell in 1989 and Germany reunified in 1990, Berlin’s two rejoined halves were woefully unprepared to compete economically with the rest of the country. Whereas West Berlin had grown accustomed to public funds to stay afloat, East Berlin’s Communist-run industry was run-down and inefficient. The city is still dealing with this double economic shock and it remains heavily in debt. Berlin owes upwards of €60 billion, but it has made good progress in recent years towards at least balancing its budget in the near future. Unemployment remains far higher than the national average, with more than 14% of the workforce without a job.

Knowing it is never likely to regain the companies it lost after the war, the city government has decided to focus on Berlin’s strengths by promoting tourism and creative fields. In recent years, big music industry names including Universal Music and MTV have moved to Berlin and the city has become a magnet for young designers and other creative types. Local commerce boosters have dubbed Berlin the ‘capital of talent’. The mayor, Klaus Wowereit, likes to call the city ‘poor but sexy’.