How Much Do Infrastructure Problems Affect Businesses in Germany? Results of IW Surveys

Following up on surveys already conducted in 2013 and 2018, the German Economic Institute (IW) this summer again asked companies how the state of national infrastructure impacts on their ongoing business activities. The results of this third poll show that since the first survey the situation has steadily deteriorated. Four out of five responding firms currently see their business activity regularly impaired by a lack of appropriate infrastructure. This is more than 20 percentage points higher than in the autumn of 2013. Since 2018, the share of companies suffering significantly from infrastructure deficiencies has increased from 16 per cent to 27 per cent, with larger concerns being particularly badly affected. The most severe burden on business continues to be an inadequate road network, while the most significant changes since 2018 have occurred in energy supply and shipping. The problems with transport networks have accumulated over many years as a result of underfunding. Although the national and regional governments are now making more funds available for investment, rising construction prices are to a large extent absorbing their impact. Moreover, the implementation of infrastructure projects is often painfully slow. Planning and approval processes take far too long and tie up too much of the authorities’ capacity. At the same time, along the entire investment chain – from planning to construction and operation of the completed infrastructure – there is a shortage of skilled labour which is only likely to increase.