In Germany, the gap between government spending and private investment continues to widen, according to new calculations from the Munich Ifo Institute, which were reported by the publication “Bild”.
Recent figures show that state consumption increased by 1.14% in the first quarter of 2026 compared to the previous quarter, while private investments declined by 0.12%.
Looking at the longer trend, government expenditures have risen by approximately 30% since 2015. In contrast, private investments have since fallen back to the levels they were at in 2015. This opposing development runs counter to the intentions of Chancellor Friedrich Merz (CDU), who aims to bring these two curves closer during his period in government.
Ifo President Clemens Fuest expressed concern about these figures, warning of a continued increase in the tax and levy burden. He stated that “the trend of expanding state expenditures and declining private investments is unbroken”. Fuest believes that this situation will inevitably cause taxes and levies to rise, which in turn accelerates the decline in private investment. To halt this downward spiral, he urged the immediate need to curb state consumption spending.
