Germany faces massive challenges: dilapidated bridges, overloaded railway lines, slow expansion of fiber optics and charging infrastructure. The federal government plans to take on debt for infrastructure investments and engage private capital. Public-private partnerships (PPPs) are intended to be used to a limited extent.

The goal is to strategically strengthen investments in transportation, digitalization, energy, and education. To achieve this, a two-thirds majority in the 20th German Bundestag created an exemption from the debt brake and established a „Special Fund for Infrastructure,“ as well as allocated funds for defense expenditures.

Public Funds, Private Capital?

In addition to loans, the governing parties also rely on private capital—such as through PPP projects. In these projects, a private company takes on the planning, construction, financing, and operation of an infrastructure measure, with the state paying over the usage period. Examples include highway sections, schools, or judicial buildings that have been built in this way over the past two decades.

„For the transportation sectors, we want to introduce financing cycles where the revenues benefit the respective sector. The model consists of three pillars: budget funds, user financing, and private capital, for example, through public-private partnerships (PPPs) to a limited extent“ (from: Coalition Agreement, 21st Legislative Period).

However, all initiatives outlined in the coalition agreement are subject to budgetary approval and must first be formalized into concrete laws and funding programs before they can be enacted.

Warnings from the Federal Court of Audit

Compared to the previous government, this is a step forward: Back then, the coalition agreement stated that core state tasks would generally remain state-funded and implemented. Only selected individual projects were to be implemented as PPPs. The current government coalition has made exceptions, particularly with regard to highway construction.

The Federal Court of Audit has frequently issued critical assessments of PPP projects in the past. A 2023 report, for instance, points out „systematically higher costs“ compared to conventional construction methods. The long-term commitment to private operators often leads to a lack of transparency and limited public control. Additionally, the high complexity of contract arrangements poses risks.

Coalition Balance Between Ambition and Reality

The debate over new investments also reflects a larger trend: the return of the state as an active player in the economy. The energy crisis, climate change, and geopolitical tensions have raised expectations for political action—and increased pressure for action. However, with every euro the state spends, the responsibility for sustainable fiscal management grows.