Investment needs in infrastructure and for the transformation

Gerards Iglesias Simon; Hüther Michael

IW-Policy Paper No. 2 14. May 2024 Sebastian Dullien* / Simon Gerards Iglesias / Michael Hüther / Katja Rietzler* Challenges for the debt brake: Investment needs in infrastructure and for the transformation

In 2019, Bardt et al. (2019) initially presented a comprehensive estimate of the unmet public investment needs in Germany not covered in household planning at the time, totaling around €460 billion over ten years.

IW-Policy Paper No. 2 14. May 2024 Sebastian Dullien* / Simon Gerards Iglesias / Michael Hüther / Katja Rietzler*

Challenges for the debt brake: Investment needs in infrastructure and for the transformation

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In 2019, Bardt et al. (2019) initially presented a comprehensive estimate of the unmet public investment needs in Germany not covered in household planning at the time, totaling around €460 billion over ten years.

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This paper updates that original estimation, taking into account factors such as increased prices, demographic changes, heightened requirements for decarbonization and energy transition, as well as investments already implemented. As a conservative estimate of the current remaining additional public investment needs over the next decade, the figure now stands at just under €600 billion. However, due to increased defense spending, which is not included in this amount, this sum is not realistically financeable within existing budgets. Nevertheless, even with slightly higher new borrowing, Germany's debt-to-GDP ratio is projected to continue to decline. Therefore, the recommendation from Bardt et al. (2019) remains intact: these needs should be covered through additional borrowing.

*external Authors

IW-Policy Paper No. 2 14. May 2024 Sebastian Dullien* / Simon Gerards Iglesias / Michael Hüther / Katja Rietzler*

Challenges for the debt brake: Investment needs in infrastructure and for the transformation

Download PDF

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