In the middle of the budget negotiations, industry is making a proposal on how to invest more in Germany. Not everyone in the federal government is happy with it.
Dilapidated railway lines and bridges, renovation of schools, expansion of daycare centers, money for more climate protection: German industry is complaining about a huge investment backlog in Germany. In order to resolve this and strengthen the location, the Federation of German Industries (BDI) is calling for billions in credit-financed special funds – as extra funds alongside the federal budget and outside the debt brake.
Industry sees investment blockade
The BDI sees an additional need for state funding of up to 400 billion euros over ten years. This includes, for example, investments in transport routes, daycare centers and schools, housing construction and climate protection. The aim is to resolve the public investment backlog, BDI President Siegfried Russwurm told the German Press Agency. “We need a major effort from the federal government, states and municipalities across party lines.”
The BDI hopes that the proposals could provide an impetus for the “investment blockade” to be resolved by means of precise, earmarked and clearly defined special funds, possibly during this legislative period. There is great concern among companies that necessary investments will be delayed. “Politicians are not coming up with any solutions. But companies need planning security.” The BDI also referred to the current weak growth in Germany.
Billions needed
“The state is currently faced with the task of having to catch up or push ahead with large-scale investments,” says a BDI paper. Investments in infrastructure, buildings and housing should be increased by around 315 billion euros over the next decade. Around half of the requirement of around 160 billion euros will go towards transport infrastructure, especially for the renovation, digitization and expansion of rail, for the maintenance and expansion of roads and the expansion of public transport. The educational infrastructure requires investments of 100 billion euros.
The climate-friendly restructuring of the economy is to be driven forward with a further 41 billion euros in investment incentives by 2030. The BDI mentions, for example, the restructuring of industry away from coal, oil and gas as well as a charging infrastructure for electric cars. Up to 40 billion euros are needed to meet Germany and the EU’s resilience goals. This involves incentives to reduce dependence on other economic regions such as China, for example in microelectronics and battery technologies.
Special fund industry
Russwurm said that the federal government must first enable growth through structural reforms, increase efficiency potential and demonstrate the courage to prioritize measures in order to consolidate the budget. “Only under these conditions do we consider it justifiable to set up special funds with precisely defined content and timing.” These could have a total volume of 400 billion euros.
After the Russian war of aggression against Ukraine, a special debt-financed fund of 100 billion euros was created in the Basic Law for the Bundeswehr; a two-thirds majority in the Bundestag was required for this. These debts are exempt from the debt brake.
The BDI rejects the abolition or weakening of the debt brake anchored in the Basic Law as not being effective. The debt brake has significantly slowed the increase in the federal government’s debt level.
Concrete form of special funds
According to the BDI proposal, different special funds should be set up for different tasks – through a separate law and with precise regulation of the tasks and financing.
Infrastructure and resilience needs could be set up through a special fund with a term of eight to twelve years – climate and transformation needs could be structured into two consecutive special funds, each with a term of two legislative periods until 2041. The BDI believes that financing would be best achieved through the issue of ten-year or even longer federal bonds. The special funds would have to be provided with a repayment plan.
Lindner rejects proposal
Federal Finance Minister Christian Lindner (FDP) wrote on the LinkedIn network on Wednesday: “The creation of debt-financed special funds is not a magic trick that solves fiscal and legal problems. The interest due will burden future taxpayers and European fiscal rules also apply to special funds.”
The federal government has sufficient revenue for significant investments until 2030, wrote Lindner. “The already considerable efforts could be further increased if priorities in the budgets of the coming years were shifted. So far, however, the problem has regularly been that funds provided in the budget cannot be spent due to lengthy planning processes and limited capacities.”
In the negotiations on the federal budget, Lindner insists that departments adhere to savings targets and that the debt brake anchored in the constitution is adhered to. This only allows for new debt to a limited extent. The cabinet is due to approve the budget at the beginning of July. Negotiations within the government are difficult, the Greens and the SPD do not want an austerity budget.
Approval for BDI initiative
“It is time for investments,” said Green Party deputy Andreas Audretsch. DGB chair Yasmin Fahimi said that more credit-financed investments by the public sector were necessary. Lindner’s current austerity measures are squandering future opportunities and destroying potential prosperity. Michael Vassiliadis, chairman of the chemical and energy union IGBCE, welcomed special funds for investments: “Because the debt brake has developed into a brake on investment.”
Source: Stern
I have been working in the news industry for over 6 years, first as a reporter and now as an editor. I have covered politics extensively, and my work has appeared in major newspapers and online news outlets around the world. In addition to my writing, I also contribute regularly to 24 Hours World.
