Delayed Payments: Why Money Doesn’t Arrive On Time

The most important and controversial vote in recent years was preceded by bitter disputes and tough negotiations: a year ago, the Bundestag changed the Basic Law shortly before it was dissolved.

The Union, SPD and Greens paved the way for the largest loans in the history of the Federal Republic. For defense spending, they suspended the debt brake, which usually only allows the government to take on new debt to a very limited extent.

In addition, a so-called special fund worth 500 billion euros was approved to make Germany’s ailing infrastructure fit again and to invest in climate protection. Spread over twelve years, that is almost as much money as is available in the 2026 federal budget.

A year later, the figures from Berlin show that the money hardly gets where it is supposed to. In the current year, a good third of the funds from the new special fund will go to transport, which is by far the largest share.

However, the government uses money from the special fund to implement projects that have already been planned but not financed. The basic idea of ​​the special fund was actually to finance new, additional investments.

However, the Ifo Institute has calculated that 24.3 billion euros flowed out of the special fund, but only 1.3 billion was actually spent on investments, i.e. additional projects. “That means that politicians have misappropriated 95 percent of the funds in 2025 and used them for other things, to plug budget holes,” explained Ifo President Clemens Fuest.

“One has to hope and demand that the additional debt taken on will actually be used for additional investments in the coming years.”

For the year 2026, around 22 billion euros are earmarked for the transport sector alone. But Peter Hübner, President of the Main Association of the German Construction Industry, calculates: “Of these 22 billion, 18.5 billion were taken out of regular budget funds from this budget and replenished by special funds. This is a sleight of hand.” Hübner goes on to say:

The situation is different for many armaments and defense companies: Hensoldt AG in Ulm, for example, produces radar systems for the Bundeswehr. Since the war in Ukraine and the changed security situation in Europe, the company has more employees and higher sales.

“We invested around one billion between 2022 and 2025,” explains CEO Oliver Dörre. You can feel how the changed threat situation is making itself felt in the economy, politics and society: “After a good 30 years of peace dividends, we have recognized that defense capability is again important for us as a country in a world full of global tension.”

Thanks to the suspension of the debt brake for defense spending, the Federal Ministry of Defense has become a solvent customer. The Bundeswehr no longer has to pay attention to every euro. It can close skill gaps and build new skills.

At Hensoldt, for example, production capacities have grown from three radars per year to 15 radars per year. “The turning point has fully arrived in the economy,” says Dörre. Hensoldt is just one of many examples. Numerous arms companies are benefiting from the change in the Basic Law and are increasing their capacities.

Defense Minister Boris Pistorius (SPD) has reformed procurement procedures. The Bundeswehr can order more quickly and armament has a high priority, as the full books in the armaments and defense industry show.

The annual balance sheet for the billion dollar decision is mixed: While the armaments and defense industry benefits, a lot of money is misused in the infrastructure sector.

The actual purpose of the special fund – additional investments beyond the planned budget – was largely missed.