One year after lawmakers approved a dedicated special fund intended to boost public infrastructure spending, the German Economic Institute (IW) reports the vehicle has largely failed to increase total investment, the institute said in a study seen by Reuters.
The IW concluded that 86% of the money spent from the fund in the past year was diverted from its originally intended purpose, rather than representing additional capital outlays. The study shows the special fund’s cash largely substituted for existing budgeted spending.
"The conservatives and Social Democrats had the chance to clear the investment backlog. So far, they have not used it," IW researcher Tobias Hentze said.
According to the study, Germany’s actual investment spending in 2025 - calculated to include outlays from the special fund and to exclude financial transactions - amounted to roughly 71 billion euros. That figure is up by just 2 billion euros in nominal terms compared with 2024.
The IW said about 12 billion euros from the fund effectively replaced core budget spending. The study cited examples such as hospital "transformation costs" that were recorded as investment even though they covered operating expenditures, describing the pattern as a budgetary reshuffle rather than an increase in net investment.
Berlin had planned to deploy 19 billion euros from the fund in 2025, but disbursements reached only about three quarters of that target, the study said.
Planned allocations also included 10 billion euros for the Climate and Transformation Fund and 8.3 billion euros intended for Germany’s states. In practice, the climate fund’s actual investment fell 8.3 billion euros short of its target and declined below 2024 levels. Funding for the states was not disbursed in 2025 and was pushed back until 2026 for administrative reasons, the IW found.
The study includes the exchange rate reference used in reporting: $1 = 0.8709 euros.
Implications examined in the study
The IW frames the recent pattern of spending as a reallocation of planned resources rather than the delivery of new capital. The analysis points to shortfalls against the fund’s own planned disbursements and to the reclassification of certain operational costs as investments.