Ifo Institute: Federal government uses 75 percent of new debt for current expenditures
The special infrastructure fund is intended to give the federal government more room for investment. However, a large part of it is being used for purposes other than those intended - with consequences for future generations.
According to a new study by the Ifo-Institut, the German government has utilized 75 percent of its newly borrowed funds for ongoing expenses rather than additional investments since the creation of the Infrastructure and Climate Neutrality Special Reserve (SVIK) last year. Ifo President Clemens Fuest stated that the political promise made during the establishment of the SVIK to fully use additional debt for investments has not been kept.
In the first half of 2026, the purpose allocation rate stands at 53 percent. Of the 21.6 billion euros in new credits, only 10.1 billion euros were allocated to investments compared to the level before the fund's introduction. In total, the Bund has taken on 45.9 billion euros in loans through SVIK by June 2026, resulting in an investment increase of just 11.3 billion euros.
The resulting investment gap of 34.6 billion euros has created budget space for other expenses, according to Ifo economic expert Max Lay. He cautioned that if the funds are effectively used for ongoing expenses instead of additional investments, future generations will inherit the debt without corresponding benefits. Ifo researcher Emilie Höslinger echoed this concern.
Written by urgent.news from Handelsblatt's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
