Economists find “deceptive packages”Ifo: Large parts of the budget investments are no investments at all
The Ifo Institute accuses the government of cheating in the 2026 budget. Billions in expenditure were incorrectly declared as investments. According to economists, this primarily involves loans to the public sector.
According to the Ifo Institute, the Berlin coalition is cheating significantly on the amount of planned investments in the 2026 federal budget. A considerable part of the expenditure recorded there is therefore not real investments in infrastructure, but rather loans for social security or international aid. The Munich economists called these expenses “sham packages” in a statement. According to Ifo calculations, more than half of the ten largest investment items are not investments. These ten items account for 24.4 billion euros – around 43 percent of all investments.
“Many of the expenses described as investments in the budget are actually not productive future expenses, but hidden subsidies,” said Ifo scientist Emilie Höslinger. Loans for the employment agency and statutory health insurance are estimated at 7.6 billion euros. The researchers criticize in their study that it is “highly questionable whether these loans actually have an investment character – i.e. whether they generate returns over a longer period of time.” Almost 6.9 billion euros are earmarked for international aid, guarantees and compensation.
The economic research institute considers real investments among the ten largest investment items to be around 5.8 billion euros in infrastructure aid, for example for roads and rails, as well as a further 2.65 billion euros for social housing. Classic investment or infrastructure measures would be scaled back or would only play a minor role compared to the largest budget items.
Fewer “real infrastructure projects”
The researchers examine household developments over the past decade. One finding: Since the corona pandemic, the federal government’s spending level has been consistently above pre-pandemic levels. Rising social spending and the defense budget are primarily responsible for this. The transport budget, on the other hand, has declined sharply. Investment shifted to grants and loans; real infrastructure projects would decrease. This increases long-term risks in the household and the imbalance between generations.
There has been criticism for months that the coalition between the Union and the SPD is also labeling consumer spending as investment. The Ifo Institute is now backing up this criticism with figures. What is and is not an investment is defined in the Federal Budget Code. This includes construction work with the exception of military installations as well as the purchase of “movable” and “immovable” items – such as vehicles or new buildings. But the acquisition of company shares and lending are also listed as investments.
In economics, investments count as expenditure on long-lasting economic goods, the purchase of which ultimately pays off in the form of higher economic output and greater productivity. These include, for example, expenditure on transport infrastructure, modern data networks or university construction.
