Investments of Several Hundred Billion Euros Needed in German Infrastructure

The extent of the urgent need to overhaul Germany’s infrastructure has been calculated in a joint study carried out by two researchers from the German Economic Institute (IW), which is close to the employers association, and two from the Macroeconomics Policy Institute (IMK), which is close to the trade unions. The study, published in the IMK News Brief 168, puts the deficit in infrastructure investment at minimally €600 billion.

However, in a major concession to the government’s green policy orientation, about one third of that sum is put in the sustainability and green-tech areas, which takes a lot of money away from investments in the classic rail, road and water infrastructure. But even with its shortcomings, the study contains an impressive message.

The €600 billion figure breaks down into: 127 billion for transport infrastructure (59.5 bn for railroads, 28.5 bn for public urban transport, 39 bn for federal highways); 177.2 bn are needed for urban infrastructure (roads, schools, water supply, power supply); 200 bn alone is assigned to climate protection (building insulation, heating systems, other innovations, including tens of billions for unproductive projects like wind and solar power facilities).

For Germany to shoulder these enormous sums, which cannot come from the regular budgets, both institutes call for a reform of the budgetary debt brake, to allow the state to borrow funds for projects.

In addition to this IMK/IW study, the enormous backlog of investments in the national waterway grid was addressed separately in a Bundestag hearing May 13, initiated by the CDU. There, the Managing Director of the Federal Association of German Inland Navigation (BDB), Jens Schwanen, stressed that the importance of inland freight shipping cannot be overestimated, as large-scale industry and shippers know, simply because of the volumes that ships can handle. It is no coincidence that major industries and economic centers are located on the canals and rivers.

There are fewer than 15 important projects now at stake, said Schwanen, calling it a tragedy that the government has failed to provide the personnel and funding required, which would only amount to €2.5 billion per year.

Cok Vinke, Managing Director of Contargo Waterway Logistics BV, pointed out at the hearing that industrial production at a consistently high level would not be possible without inland waterway transport. Therefore, its maintenance, expansion and transformation is a worthwhile investment for the economy as a whole, and generates a cross-sectoral return.

Concerning the rail system, Switzerland’s railroad officials again complained last week about the snail pace of progress in Germany. If projects, particularly on the main North-South routes of European rail transport, are not accelerated, they maintain, the German connection to the two big Alps crossings of the Gotthard and Brenner tunnels will not be completed before 2040-2042.