Economic expert Clemens Fuest, head of the Institute for Economic Affairs (Ifo), has called for a strategy to be implemented for the allocation of the 500 billion euros in special funds for infrastructure, as decided upon recently. Fuest emphasized the need for a clear vision for the infrastructure in the year 2040, stating that it is essential that the existing transportation networks function well.
While the state should not define the future of the entire economy, it must have a plan for its infrastructure, Fuest said. He also stressed the importance of preventing the additional funds from simply driving up prices, particularly in the construction sector, which is already fully booked. According to Fuest, it is necessary to encourage domestic companies to expand their capacities and to include companies from all of Europe in the bidding process.
Fuest also rejected the notion that the debt brake has been rendered ineffective by the recent amendments to the German constitution. “The debt brake is still in effect” he said, “the 500 billion euros for infrastructure, spread over 12 years, are not a significant amount. Moreover, rising interest costs will narrow the room for maneuver. Then, we will quickly experience that the debt brake will exert new pressure.”
Fuest, along with three other economists, had written a draft for the fiscal package during the negotiations. “I am pleased with the outcome” he said, looking at the decisions made on Tuesday, “not because of our paper, but because it is the right decision for the country in the face of the massive geopolitical threats. Germany is taking on more responsibility for its defense. This is an important signal to our allies, as well as to Vladimir Putin and Donald Trump.