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 – a professor at the University of Freiburg and adviser to Finance Minister Christian Lindner – said the country’s motorways, railways and energy infrastructure require urgent funds.
“Government investment has long since failed to maintain the status quo,” said Feld.
The study, commissioned by fund manager Union Investment, estimated that more than €57 billion will need to be invested in road infrastructure alone between 2025 and 2028, with a further €63 billion required for railways.
Long-term investment in onshore and offshore energy facilities as part of the green transition could amount to €270 billion, the report suggested.
Finding the capital to make the massive investments could prove difficult, with Germany’s economy stagnating and its government’s ability to spend hampered by tight fiscal rules known as the debt brake.
In 2022, the country’s national investment rate – the share of public investment in comparison to gross domestic product (GDP) – was 2.6%, around one percentage point lower than the OECD average.
One solution, Feld said, could be to involved 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 borrowing powers, the economist suggested.
The study came one day after German Economy Minister Robert Habeck proposed creating a national investment fund to provide impetus to the country’s ailing economy.
The scheme would allow companies to have 10% of the value of their investments either deducted from taxes or directly reimbursed by the state.