A recent analysis by the German Institute for Economic Research (IW) suggests the governing coalition is utilizing the Special Fund for Infrastructure and Climate Protection (SVIK) to address budget deficits, rather than solely for additional investments as initially intended.
The IW’s study reveals a significant shift in funding allocations. The German railway company, Deutsche Bahn, is earmarked to receive €18.8 billion from the SVIK, while federal rail investments within the core budget are projected to decrease by €13.7 billion in 2026. Similarly, plans for the renovation of highway bridges are set to draw €2.5 billion from the SVIK in 2026, contrasted with a reduction of €1.7 billion in federal highway investment. Funding for broadband expansion and hospital investment is also being channeled through the SVIK. Broadband expansion will receive €2.3 billion through the fund in 2026, a notable increase from the €1.8 billion allocated within the core budget in 2024, where it will no longer be found.
The coalition is creating a fiscal space of approximately €10 billion within the transportation infrastructure sector alone, a figure the IW contends avoids the need for cuts in other areas. However, the organization highlights that the full extent of this practice remains unclear due to the complexity of tracking expenditures across the core budget, the Special Fund and the KTF (a project management system).
Tobias Hentze, budget expert at the IW, cautioned that this approach jeopardizes the government’s credibility. “Instead of financing new bridges, Germany is now using the Special Fund to finance initiatives such as the ‘Mütterrente’ (parental allowance), which is a serious misstep” he stated.