Germany’s stagnant economy sparks debate over €500 billion infrastructure fund
Germany's economy is facing a challenging period, with GDP contracting for two consecutive years. Growth prospects remain subdued, with minimal expansion forecast for 2025 and a slight uptick in 2026. The Council of Economic Experts has issued a critical report, highlighting concerns about the management of a €500 billion infrastructure fund.
The council's report forecasts minimal GDP growth of 0.2 percent in 2025 and 0.9 percent in 2026, largely driven by increased government spending and a calendar effect. However, it expresses concern that much of the allocated money is not being used for additional investments but is instead covering existing budget items and short-term spending.
The council proposes stricter legal requirements and an independent monitoring body to ensure investments meet the additionality criterion. The German Trade Union Confederation (DGB) supports this demand, urging stronger legal regulations to prevent misuse of the Special Fund for Infrastructure and Climate Protection.
The council also calls for reforms to the taxation of inheritances and gifts, arguing that all forms of wealth should be taxed uniformly. Over 12 years, €500 billion has been earmarked for the infrastructure pot, with €98 billion qualifying as additional investments by 2030. The Green Party has accused the government of breaking its promise to use the funds for additional investments and climate initiatives.
The Council of Economic Experts' report underscores the need for stricter oversight and better use of funds to stimulate Germany's economic growth. With GDP growth forecasts remaining low, the government must address these concerns to ensure the effective use of the €500 billion infrastructure fund.
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