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Germany plans to make its faulty railway network its first priority as it seeks to fast-track spending from its €500bn infrastructure fund designed to lift Europe’s largest economy out of stagnation.
Vice-chancellor and finance minister Lars Klingbeil wants to inject up to €10.5bn into the country’s train links this year, giving state-owned Deutsche Bahn the lion’s share of €22bn of infrastructure investments earmarked for 2025, according to people with knowledge of the plans.
Other planned investments this year include €3bn to improve broadband coverage in the country and €1bn to modernise bridges, they said. After 2025, the sums put towards infrastructure are expected to increase to as much as €35bn a year until 2029.
The plan is part of a series of measures the coalition government led by Chancellor Friedrich Merz wants to adopt this month, with the expectation they will be approved by both houses of parliament in September.
Alongside a massive spending drive to equip the German army, the €500bn 12-year infrastructure fund is central to the coalition’s attempts to put an end to three years of economic stagnation. Last week the government approved a €46bn package of corporate tax breaks for the coalition’s 2025-2029 term.
The infrastructure fund and its first allocations will be adopted in a cabinet meeting on June 24, at the same time as a budget for 2025, which was never finalised when the preceding coalition of Olaf Scholz collapsed over a funding dispute in November.
After his conservative party’s victory in early elections in February, Merz relaxed the country’s constitutional debt cap, allowing unlimited borrowing for defence and setting up the €500bn fund to modernise the country’s ageing roads, bridges, hospitals and schools. The priority for the next two years is a quick deployment of cash, before the government adopts a more strategic and longer-term approach to investments.
“The big question is: ‘how quickly can we put this money to work’ and the Deutsche Bahn is the obvious place to start because they already have detailed investment projects in their drawers,” said Henning Meyer, professor of public policy at Tübingen university.
The poor state of German trains, which often run late, has become a symbol for the dire under-investment weighing on Europe’s largest economy. Before the Scholz-led coalition broke down, Deutsche Bahn had identified €53bn worth of required investments.
A spokesperson for the finance ministry declined to comment on fund distributions but said that “a ramp-up of investments” in the federal railways was planned. The fund’s “primary objective is to rapidly implement investments in Germany and thus quickly create new jobs and modern infrastructure” they added.
Deutsche Bahn declined to comment.
By fixing intercity commuting, the government is betting it will change the political mood in the country, where the far-right Alternative for Germany has become the second largest party in the Bundestag, with more than a fifth of the votes.
Meyer said: “Even though it means disruptions in the short run, this is where people are likely to experience concrete improvement in their daily lives.”
The 46-year-old Klingbeil, who is also co-leader of the Social Democratic Party, hopes to reap the political rewards for upgrading the country’s creaking infrastructure ahead of general elections in 2029.
With a 16 per cent vote tally in February, the SPD suffered its worst electoral result since the end of the 19th century. However it emerged as the only possible coalition partner for Merz’s Christian Democrats, after he ruled out governing with the AfD.
This strong negotiation position helped Klingbeil secure the €500bn infrastructure fund — a SPD campaign pledge — in exchange for agreeing to back Merz’s plan to relax the debt brake for defence spending.
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