According to calculations from the Ifo Institute, the German government used 95 % of the new debt raised in 2025 for purposes other than additional infrastructure investments. The institute’s current analysis of the Special Fund for Climate Neutrality and Infrastructure (SVIK) shows that almost all of the debt‑financed money was deployed to cover budget deficits rather than to fund new projects.
“We found that the policy almost completely redirected the borrowed funds for purposes other than investment, essentially plugging budget holes. This is a serious problem. The additional debt should have been used for new investments that support long‑term economic growth” said Ifo President Clemens Fuest.
The data reveal that borrowing under the SVIK was increased by €24.3 billion in 2025. However, federal investment only rose by €1.3 billion compared with 2024, leaving a shortfall of about €23 billion of the new debt that did not flow into additional spending.
The misuse stems from the government cutting the core budget investment sum for 2025 relative to 2024. “We saw a shift of individual items from the core budget into the debt‑financed SVIK. This included particularly transportation subsidies, which is why the core budget invested less than in previous years. Consequently, a large portion of the special fund investments were not actually additional” explained Emilie Höslinger, a researcher at the Ifo Center for Macroeconomics and Surveys.
According to the institute, it is unacceptable to argue that delays in legislation or real‑economy bottlenecks slowed the outflow of the funds, because such delays would have prevented the debt from rising so sharply. “In the future the federal government can reduce the extent of this misuse. That would mainly require increasing investment outlays in the core budget; otherwise the notion of ‘additional investments’ remains meaningless” said Max Lay, a specialist at the Ifo Center for Finance.
