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Germany’s Parliament, Bundestag, approved the draft bill amending the Basic Law which allows for the establishment of a special fund with additional EUR 500 billion for German infrastructure to achieve climate neutrality by 2045. The amendment to the Basic Law was voted by a two-thirds majority of the Bundestag allowing the massive financing for both infrastructure and defence sectors. The draft bill has been voted by SPD (Social Democratic Party), CDU/CSU (Christian Democratic Union / Christian Social Union in Bavaria) alongside with the Greens. The voted draft bill is a “historic decision” and a “historic compromise” between the SPD, the CDU/CSU, and the Greens. It could also represent a positive new beginning for Germany and Europe,” as Germany “must now assume leadership responsibility in Europe,” Lars Klingbeil, the SPD parliamentary group chair said. According to different studies, the German infrastructure needs additional investments, including in the areas of decarbonisation, transport, and education. In addition, investments by the federal, state, and local governments would have to be significantly increased. In order to meet the needs of this enormous magnitude in the coming years, medium-term planning security is required, given limited public and private capacities. Bundestag says that public investment funds alone will not be sufficient to increase Germany’s competitiveness and thus strengthen its financial basis through growth. Therefore, further growth measures will have to be implemented in the short and medium term, including the new special fund. In order to strengthen the investment orientation of the public budgets of the states and municipalities EUR 100 billion is earmarked for investments by the states and municipalities, while EUR 100 billion is available to the Climate and Transformation Fund. According to the draft, investments are to be approved over a period of twelve years. The original draft envisaged a term of ten years. The federal investment made possible through this special fund, as an integral component of a comprehensive growth and investment package of the federal government, can significantly strengthen the medium-term economic growth of the German economy. In addition to the direct impact of the expansion of the public capital on economic growth, public investments strengthen economic growth primarily through the associated improvement in the overall economic environment and the improved planning security. This contributes to the sustainability of public finances, as the additional economic growth more than compensates for the burdening effects of higher debt levels in the medium term. Under conditions of higher growth rates, the sustainability of public finances remains intact even with higher absolute debt. At the beginning of March, the Federal Ministry for Digital Affairs and Transport, Volker Wissing, said that German infrastructure EUR 220 billion by 2029 to ensure a better and connected mobility. With the general renovation of the railways, the bridge modernisation program, and a rehabilitation programme for waterways, trend reversals have been initiated in all areas of transport. “Now we also need financial resources. And we need a ramp-up that is secured over a longer period. Because only then will the industry build up capacity to actually be able to invest the money,” Wissing said in an interview with ntv.de. He emphasised that Germany “needs more money for infrastructure,” and the existing financial gaps in the budget must be closed promptly and reliably. Transport routes should be able to withstand not only passenger and commercial traffic, but also the demands of the military. Because when troops need to be deployed or weapons systems transported within Europe, Germany is an important transit country. That’s why we need functioning roads and railways,” the minister underlined. In Germany, a lot of construction was done in the 1960s and 1970s, for example, highway bridges. These have now been renovated almost simultaneously – this cannot be financed with current revenues alone. “These are situations in which we have to think differently about infrastructure. That’s why I proposed an infrastructure fund to provide options outside the budget. Now we’re going down the path of a special fund. That’s also a solution,” Wissing said. Relating to rail investment, according to the 2030 targets of DB InfraGO, 4,000 highly utilized track kilometers bundled into 40 high-performance corridors will be modernised and 24,000 kilometers of other parts of the network next to the high-performance network, so that the condition of the facilities will also improve in general. In addition, stations will be modernised and reconstructed to become attractive stations of the future, while the rail infrastructure will be digitalised to provide additional capacity and fatster services. In 2024, DB InfraGO has invested EUR 17 billion. Deutsche Bahn intends to deliver a high-performance network for over 9,000 km by 2030. |
