Germany's €500 bln climate and infrastructure fund spending lagging behind – govt report

Spending from Germany’s 500-billion-euro special fund for infrastructure and climate neutrality has remained behind government targets, according to a finance ministry report. In 2025, the fund was supposed to disburse 37 billion euros, but ultimately only 24 billion euros were paid out. "Overall, it is clear that implementation needs to be stepped up," said the finance ministry. Germany's government last year agreed on a debt-financed special fund worth 500 billion euros for a wide range of infrastructure and climate neutrality projects over the next decade. The special fund, introduced in combination with a major defence package, allows the coalition government of chancellor Friedrich Merz to bypass the country's debt brake and make additional investments that are meant to improve Germany's competitiveness and put the country on track towards achieving a net-zero economy by 2045.Due to the change of government and the lack of legal requirements for federal state spending in 2025, only a few months could effectively be used to disburse the money, the finance ministry report said. Initial progress could be seen in housing or digitalisation. However, the investment areas of energy infrastructure, research and development, and transport infrastructure showed the lowest progress and impact indicators. In 2026, the finance ministry expects "significant progress" on spending. Twenty-eight percent of earmarked funds totalling 40 billion euros for the entire year had already been spent by the end of April, it said. Economists and business leaders have remained critical of how the government is using its 500-billion-euro asset. Economic research institute ifo recently said that 95 percent of the new debt earmarked for spending in 2025 has been misallocated and did not result in additional infrastructure investments as intended. Several former members of the German parliament (Bundestag) from the pro-business Free Democratic Party (FDP) are challenging the fund in court.

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