Challenges for the debt brake: Investment needs in infrastructure and for the transformation
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.
Sebastian Dullien* / Simon Gerards Iglesias / Michael Hüther / Katja Rietzler* German Economic Institute (IW)
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.
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.
Public spending in international comparison: Where does Germany stand in comparison to its neighboring regions?
Germany faces numerous political challenges. How these tasks are prioritized is reflected in spending policy. It is not without reason that the budget is often referred to as “politics cast in numbers.”
The composition of municipal expenditure in Germany – A consideration over 30 years
The condition of local public finances is an ongoing topic in the financial policy debate. Local deficits have risen again recently, as has the investment backlog. The public debate often focuses on the revenue side of local authorities.
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