Germany has spent a tenth of 500bln-special fund as doubts over effectiveness persist

One year after the launch of Germany’s special fund for infrastructure and climate neutrality, about one tenth of the 500 billion euros earmarked have been spent, according to figures released by the finance ministry. Roughly 51 billion euros had been invested by August, news agency dpa reported in an article published by newspaper Die Zeit.  

At an event in the eastern city of Halle, finance minister Lars Klingbeil said the government is investing in infrastructure projects including railways, hospitals, schools, kindergartens and waterworks. Critics say that a large part of the special fund has been misused and that the government is using the money to plug gaps in the regular budget rather than making additional investments. 

Additionality was agreed as a guiding principle when the debt-financed fund was set up in early 2025 by the coalition government parties, Klingbeil’s Social Democrats (SPD) and chancellor Friedrich Merz’s conservative CDU/CSU alliance, with the help of opposition parties needed to achieve a two-thirds majority in parliament. The money is to be spent over a period of twelve years to make much-needed investments in areas including transport infrastructure, digitalisation, education and housing. With 100 billion euros, one fifth of the fund was earmarked to fund climate action measures, a feature added by the Green Party as a precondition for consenting to the debt package. 

According to researchers such as the institute ifo, however, most of the money withdrawn from the fund so far did not go into additional projects. In 2024, for example, the previous government spent 7.5 billion euros on railway projects from the regular budget. The government of chancellor Merz then cut investments from the regular budget to zero and instead used 7.6 billion euros from the special fund to invest in new tracks and trains, meaning almost no additional money went into the sector, while the money freed up in the regular budget went into consumptive one-off projects, such as a special pension for mothers or tax cuts for restaurant owners, Die Zeit said. 

Government figures put the increase in investment between 2024 and 2025 at 12.3 billion euros, while about 24.3 billion euros were withdrawn from the fund during the same period. 

In a survey among about 4,900 engineering and architecture companies across the country, the greatest debt package in the country’s history so far has not led to a significant increase in projects in the sector, news magazine Der Spiegel reported. About half of the companies did not expect their order books to change in the coming six months, while 30 percent even expected fewer orders. “The special fund has not arrived in engineering offices so far. Germany’s infrastructure will not really improve in the next three years this way,” said Jörg Thiele, head of the national chamber of engineers and architects (VBI).