Finance Minister advised: Where is the investment wave for Germany?

Finance Minister advised: Where is the investment wave for Germany?

Kiel, Deutschland - On May 9, 2025, the annual conference of the finance ministers of the federal states, chaired by Dr. Marcus Optendrenk (North Rhine-Westphalia). The focus of the consultations was the situation of public finances in Germany. The conference showed that the German economy continues to remain in a phase of weakness, with real growth of -0.2 % in 2024, which is the second year in a row.

causes of the economic weakness are both the economic and structural nature. In addition, an increasing uncertainty is found through the protectionist trade policy of the new US government and by turbulence on the financial markets. The inflation rate was 2.1 % in April 2025 and approaches the target corridor of the European Central Bank. Stabilizing growth in real income, on the other hand, support private consumption.

financial perspectives and challenges

The finance ministries called for increased investment activities in Germany to counteract the ongoing investment backlog. The constitutional basis for a special fund of the federal government provides for a loan authorization of over 500 billion euros, which is to be used for infrastructure and climate neutrality by 2045. According to the ministries, additional funds must be invested in growth -promoting measures.

Another important aspect of the conference was the forecast of the federal government, which predicts a stagnating real gross domestic product (GDP) of 0.0 % for 2025 and growth of 1.0 % for 2026. The production potential will only grow by 0.4 % annually by 2027. In the future, this economic dynamic will be borne more through investments and technical progress than by the labor market. Nevertheless, the environment for financial policy remains volatile, although the effects of changed framework conditions on the public general budget cannot yet be fully estimated.

The total state deficit was around 119 billion euros in 2024, which corresponds to 2.8 % of the nominal GDP, while the gross debt is 62.5 % of GDP and thus remains below the EU average. The ministers emphasized the need for a pragmatic procedure to accelerate awarding, planning and approval procedures in order to address the urgent need for investments.

The report also predicts that aging -related public expenditure up to 2070 could increase from 27.3 % to 36.1 % of GDP under unfavorable conditions, while these would increase to 30.8 % under favorable conditions. In order to keep the debt ratio at 60 % by 2070, an annual need for adaptation of up to 4.71 % would be required. The financial policy needs of action focus primarily on the federal level, while countries and communities seem to be less affected, such as [bundesfinanzministium.de] (https://www.bundenfinanzministium.de/monatsberichte/ausprege/2024/04/kapitel-3-analysen/3-3-3-sechster-tragfat- report.html).