Germany to Spend Extra Hundreds of Billions on Infrastructure
German legislators have approved constitutional changes that will allow the government a half-trillion euros of additional credit leeway for infrastructure and other investments in the coming years.
Mar 21, 2025
Both chambers of the German parliament, the Bundestag and the Bundesrat, approved the new rules, which will give the government new flexibility in funding major projects. The state will now be permitted to raise a half trillion euros in off-budget funds in the next twelve years to overhaul infrastructure. EUR 100 billion of that money can be spent on climate-protection measures.
Defense spending has been exempted from limits on structural budget deficits to 0.35 percent of German GDP – the so-called debt brake. It also lifts a prohibition on the Federal Republic of Germany’s sixteen constituent regional states taking on new credit debt. In future the regional states will also be allowed to obtain loans up to 0.35 percent of national GDP. The World Bank estimated German GDP to be worth over USD 4.5 trillion in 2023, making it the third largest in the world.
The constitutional changes were made as Germany waits for a new government after national elections in February. The conservative CDU-CSU and the Social Democratic Party are currently negotiating over the formation of such a government.
“The package to increase Germany’s borrowing capacity is good news for the German economy,” said Robert Hermann, CEO of Germany Trade & Invest, the country’s international business promotion agency. “The greater leeway concerning state credit will create business opportunities and will allow Germany to finance much-needed infrastructure and climate protection projects. This and the rest of the legislative action are indelible proof that the German state continues to function as Germans wait for a new government to take office.”
