Germany Has the Cash to Revitalize Its Economy, but Can’t Seem to Spend It
Bureaucracy and capacity bottlenecks are delaying Germany’s $600 billion spending splurge
BERLIN—A mammoth economic stimulus passed last year in Germany was meant to jolt the country—and Europe—out of its economic slumber. The problem: Germans just aren’t good at spending money.
A year on, much of the planned $584 billion infrastructure plan remains unspent, locked behind bureaucratic bottlenecks set up to guard against excessive spending in the notoriously frugal country.
Money from the “Big Berlin Bill”—as Deutsche Bank called it—has yet to show up in a meaningful way. The government’s budget deficit was 2.7% of gross domestic product last year, unchanged from 2024 and about half of that of the U.S.
Running out of patience is Marco Beckendorf, mayor of Wiesenburg. The 44-year-old said he hasn’t received a cent of the $2 million in stimulus money he hoped to invest into road and school repairs and to refurbish an industrial zone for his rural community of 4,200 outside Berlin.
Slow planning processes and uneasiness about public debt are to blame, he said. “We have forgotten how to take on debt.”
While much of the rest of the developed world is swimming in too much debt, Germany is having trouble using just a tiny bit more. The German economy desperately needs priming. It has barely grown since before the Covid-19 pandemic, hammered by soaring energy prices, President Trump’s tariffs and rising competition with China, previously the growth engine for German cars and machinery.
Business confidence hit a six-year low in April, according to a prominent survey, prompting renewed talk that Germany’s economic growth model is broken. Planned overhauls of the country’s expensive welfare state, which could also help growth, are stuck because of disagreements in the government.
Germany’s problems have left Europe without its traditional growth engine just as the region needs to boost spending to counter growing security threats, an increasingly adversarial U.S. and a rapid demographic transition.
Berlin’s infrastructure bonanza was going to change this. The historic spending spree, economists hoped, could turbocharge productivity by upgrading the country’s railways, highways, communication networks, universities and a largely paper-based public administration—all in need of repair after decades of austerity.
“The processes are still way too slow and the incentives aren’t there for civil servants to say, ‘here’s a project, let’s do this’,” said Tobias Hentze, economist at the German Economic Institute, a think tank.
Take the famed German autobahn and wider road networks.
Shortly after parliament enacted the infrastructure bill, red and white barriers began popping up across the capital, shutting down vital arteries. In many cases, the barriers are still there, but little or no roadwork has happened.
Such phantom construction sites are caused by regulations that force public authorities to cut up large public projects into smaller lots and tender them separately. It is meant to ensure small companies can participate in public infrastructure projects. In practice, it is gumming up urgent upgrades.
“It’s utterly absurd,” said Jens Südekum, professor of international economics at Düsseldorf’s Heinrich Heine University and co-author of the stimulus plan. “It’s one of the many sources of friction that the government is trying to eliminate.”
Germany has shown it can get rid of bureaucratic strictures. In 2022, after Russia invaded Ukraine and choked natural gas deliveries to Europe, Berlin suspended planning regulations to build three liquefied natural gas terminals on its northern coast. The projects, which would have normally taken five years, were completed in about 10 months.
A bill in parliament would try to do the same for big infrastructure projects, which can currently stretch into years because of onerous consultation procedures and lengthy court challenges.
“The idea is that if there is a legal challenge, the project still goes on,” said Südekum.
Economists suspect a reason for the lack of uptick in public investments: Some of the money is being spent on running costs rather than new projects.
The Ifo economic institute and the German Economic Institute found in separate studies that Berlin had diverted between 95% and 86% of the funds. One example, said Hentze, was labeling the modernization of public hospitals as investment whereas much of this money was going into operating costs.
A spokeswoman for the finance ministry said that while the investment offensive had only been launched late last year, investments by the federal government had risen 17% in 2025 and were expected to rise another 37% this year. She said Berlin was abiding by the rules parliament had set to define investments.
In private, German officials say some relabeling has happened but nowhere near the level alleged by the institutes. The finance ministry has set up a department to monitor public investment that will inform parliament and has begun publishing updates online.
Meanwhile, delays are already piling up. A new rail tunnel through the Alps will whisk passengers and freight from northern Italy to Munich at speeds of up to 155 miles an hour. But the trains will slow dramatically on reaching the Austrian-German border. While Italy and Austria have mostly finished heavy construction on their sections of the railroad, which is expected to open in 2032, Germany is years behind.
Michael Hetzl, mayor of Mühldorf am Inn in southern Bavaria, isn’t holding his breath. He and public officials have been discussing for decades an upgrade of a critical railroad that runs from the Austrian border through Mühldorf to the Bavarian state capital, Munich, 50 miles away. The investment would convert a mostly single-track, diesel-operated line into a fully electric, double-track high-capacity route.
Hetzl had hoped that the project, which he says is critical for a local cluster of chemical businesses, would be financed by the new federal infrastructure fund. So far, it hasn’t been approved. The town is due to receive €1 million directly from the stimulus fund, which is “good, but not a game-changer,” given that it costs €5 million to build a Kindergarten, Hetzl said.
The mayor recently wrote an open letter to Chancellor Friedrich Merz, complaining that the stimulus money isn’t flowing into vital infrastructure projects.
“We now have plenty of money in Germany,” said Hetzl. “But it isn’t clear how to access it.”