A special infrastructure fund in Germany has largely failed to generate additional investment one year after its approval, according to calculations by the German Economic Institute (IW) and the Ifo Institute. The unprecedented 500-billion-euro fund was approved last March to revive the German economy. However, economists and business groups warned that the fund alone cannot deliver sustainable growth.
The IW stated that 86% of the money used in the past year was diverted from its intended purpose. The Ifo Institute calculated that figure at 95%. According to the IW study, the German government’s investment spending totalled about 71 billion euros in 2025, only up 2 billion euros from 2024. In response, a finance ministry spokesperson said the allegations were incorrect, stating that investment spending in 2025 increased by around 17% compared with 2024 and totalled 87 billion euros.
IW further stated that an additional 12 billion euros from the fund were used for core budget spending rather than new investment. They cited hospital transformation costs as an example. Berlin had planned to spend 19 billion euros from the fund in 2025, but only about three-quarters of that was disbursed, the IW study said. Ifo calculated that borrowing under the special fund rose by 24.3 billion euros, but Berlin’s investments increased by only 1.3 billion euros compared with 2024.
Ifo President Clemens Fuest said, “We found that the government used the debt-financed funds almost entirely for other purposes, in other words, to plug budget holes.” The Ifo Institute is a Munich-based research institution that analyses economic policy. The German Economic Institute (IW) is a research institute that focuses on economic and social research.
