Ifo Institute says German government shifts infrastructure funds to defence budget

The Munich‑based Ifo Institute criticised the German federal government for re‑classifying €4.2 billion of infrastructure and climate‑neutrality funds from the special fund (SVIK) into the defence budget’s “area exemption”. By moving the money, the government can finance it through debt and still meet the legally required 10 % investment quota in the core budget. Ifo calculated that without the shift the quota would stand at 9.9 % instead of the reported 10.8 %.

Ifo President Clemens Fuest said, “Overall the state does too little to curb non‑priority spending and boost investment, so it has to resort to bookkeeping tricks.” Ifo researcher Emilie Höslinger added that the maneuver masks overall insufficient infrastructure investment.

The institute warned that such accounting tricks could conceal further shifts, undermining the transparency of the federal budget and the effectiveness of Germany’s infrastructure spending goals.