Berlin's airport, the Elbphilharmonie concert hall in Hamburg, the Stuttgart 21 railway station — there is no shortage of inglorious examples of major projects in Germany that got out of hand. Planning errors, construction errors, exploding cost, legal disputes, years of delays — the list is long.

The reasons are manifold, ranging from planning mistakes to lengthy approval procedures to a shortage of materials on the construction sites.  

Money alone is not enough

The likely future government of the center-right bloc of Christian Democratic Union and Christian Social Union CDU/CSU and the center-left Social Democratic Party (SPD) has secured approval from the lower and upper houses of parliament, the Bundestag and the Bundesrat, for constitutional change paving the way for unlimited defense spending and €500 billion ($542 bn) to be invested in infrastructure and climate protection over the next twelve years.

The German Taxpayers Association (BdSt) believes this decision to have been a mistake. Although there is a serious backlog in investment, BdSt President Reiner Holznagel told the Augsburger Allgemeine newspaper that lack of financial resources is not the problem. "Germany is suffocating because of bureaucracy and inefficient structures. We need faster approval procedures and clear responsibilities! But a new debt fund does not solve any of these problems," he said.

Economist Veronika Grimm agrees. She warned that the money from the debt package can not be spent quickly. Planning and approval procedures are a "bottleneck for the outflow of funds," Grimm told the Budget Committee of the Bundestag.

Grimm urgently calls for "growth-boosting reforms."  She warned that the additional spending is not expected to have any effect on economic growth in 2025. She expects a moderate effect in 2026. "2027 will then depend on how well the funds are used," Grimm said.

Grimm's forecast should set alarm bells ringing among politicians. After all, the billions in debt are primarily intended to help revive Germany's economy as quickly as possible.

"We can start immediately. The construction industry has the capacity for new orders and the expertise to implement the necessary infrastructure projects," wrote Felix Pakleppa, Managing Director of the German Construction Industry Association in a press release. He points to 40% of all construction companies complaining of a lack of orders.

In the construction sector, orders have fallen drastically in some cases over the past two years. Russia's invasion of Ukraine, the subsequent energy shortage and inflation have caused prices to rise significantly. This has slowed down residential construction in particular.

Approval procedures take far too long

The construction industry is also urging a reduction in bureaucracy. "In highway construction, up to 85% of the time is spent on planning processes — only 15% on the construction itself," Pakleppa argued.

There have been calls for a reduction in bureaucracy for years. Companies have been complaining about the burden of lengthy administrative procedures, verification and documentation obligations, statistical reports, and data protection requirements as the biggest obstacles to more economic growth. The ifo Institute in Munich wrote in a study at the end of 2024: "Germany is losing up to €146 billion per year in economic output due to excessive bureaucracy."

The shortage of skilled workers will increase

Another problem could arise from the shortage of skilled workers, which has been growing for years. Companies may have many more orders than they can actually handle. 

But where will the additional workers come from? Germany is an aging society, and a particularly large number of people will be retiring in the coming years. There is a shortage of young talent.

A study by the Bertelsmann Foundation from the end of 2024 states that around 288,000 workers from abroad will be needed every year until 2040. The study does not even include the demand that may arise from the defense and infrastructure package.

Might €1 trillion not be enough?

In order to rearm the Bundeswehr quickly, weapons and military equipment need to be procured at shorter notice than ever before. This promises a golden era for companies such as Rheinmetall and Airbus. They can now practically dictate prices.

The notoriously crowded and delayed German rail service Deutsche Bahn has launched the largest refurbishment project in its history and plans to renew over 4,000 kilometers of tracks over the next few years. Deutsche Bahn has already calculated that it will need €290 billion to renew its infrastructure by 2034.

A calculation by the Federal Ministry of Transport estimates that €140 billion would be needed to maintain Germany's main roads alone.

With all that, the new infrastructure package would almost be used up over the next twelve years. A recent analysis by the consulting firm strategy&, a subsidiary of the auditors PwC, has calculated that the money will not be enough: The requirement at federal, state and local levels would amount to €982.1 billion by 2035.

And a gigantic rise in interest payments is looming: According to the German Federal Audit Office, Germany currently has a debt of €1.7 trillion and is paying around €34 billion in interest annually. The Court of Auditors has warned the Bundestag Budget Committee that the new plans will lead to an additional interest expenditure of €37 billion per year from 2035 onwards.

This article was originally written in German.

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