Germany’s crumbling infrastructure could require investments of around €400 billion ($432 billion) in the coming years, an influential economist said on Thursday.
In a new study, Lars Feld – professor at the University of Freiburg and adviser to Finance Minister Christian Lindner – said the country’s highways, railways and energy infrastructure are in urgent need of funding.
“Government investments have long since failed to maintain the status quo,” Feld said.
The study, commissioned by fund manager Union Investment, estimates that more than €57 billion will need to be invested in road infrastructure alone between 2025 and 2028, with a further €63 billion needed for rail.
Long-term investments in onshore and offshore energy facilities as part of the green transition could amount to 270 billion euros, according to the report.
Finding the capital to make the massive investments could prove difficult, with the German economy stagnating and the government’s ability to spend money hampered by strict fiscal rules known as the debt brake.
In 2022, the country’s national investment rate – the share of public investment compared to gross domestic product (GDP) – was 2.6%, around one percentage point lower than the OECD average.
One solution, according to Feld, could be to involve private investors in projects such as infrastructure funds.
The German state has a stake in a number of infrastructure companies, which could be given additional lending powers, the economist suggested.
The study came a day after German Economy Minister Robert Habeck proposed setting up a national investment fund to boost the country’s ailing economy.
The scheme would allow companies to deduct 10% of the value of their investments from taxes or have them reimbursed directly by the state.
