Autobahn GmbH halts all procurement requests or bids.
In the heart of Europe, the German construction industry is grappling with the repercussions of the ongoing federal budget crisis. Here's a roundup of the key impacts on infrastructure projects and the construction sector:
## Struggles in the Construction Sector
1. **Lost Construction Year**: The president of the industry association HDB, Peter Hübner, has warned that the construction year 2025 could become a lost year due to the delay in implementing the special fund. This delay has been caused by the collapse of the traffic light coalition and the delayed availability of a new budget until fall[1].
2. **Halt in Tenders**: The halt in tenders is a direct consequence of the provisional budget management, which has been in effect since January. This has led to order shortages for companies in the construction industry since November 2024[2].
3. **Project Delays**: New projects cannot be initiated under the provisional budget management, causing delays in the commencement of new construction projects[3].
4. **Short-time Work**: In some areas, such as bridge construction, short-time work has been implemented due to the lack of available projects[4].
5. **Decline in Turnover**: The turnover in the construction industry for 2025 is expected to decrease by one percent, reflecting the challenges faced by the sector[5].
## The Federal Government's Response
1. **High-Borrowing Budget**: The German government has approved a high-borrowing draft budget for 2025, which includes significant investments in infrastructure. Although the budget is not specifically detailed on infrastructure allocations, the overall increase in borrowing suggests potential funding for various projects, including infrastructure development[1][3].
2. **Defense Spending Increases**: The defense budget is increasing significantly, with some expenditures exempt from the debt brake. This could potentially divert resources away from civil infrastructure projects towards defense infrastructure[6].
3. **Fiscal Expansion**: German Finance Minister Lars Klingbeil has emphasized that the fiscal expansion, including increased borrowing, will not contravene EU deficit rules. This expansion could support infrastructure projects by providing more financial resources[3].
4. **Reductions in Development Aid**: While not directly impacting domestic infrastructure, the cuts in development aid reflect broader fiscal challenges. These cuts might indicate a shift in priorities towards domestic spending, potentially benefiting infrastructure projects[2].
## Criticism and Challenges
The financial plans have been criticized by experts like ifo President Clemens Fuest, who finds them problematic. This criticism might affect the stability and confidence in long-term infrastructure investments[4].
The managing director of the main association of the German construction industry, Tim-Oliver Müller, has criticized the delay in implementing the special fund, stating that 70 to 80 construction projects could have started immediately if a decision had been made before the summer break[1].
In the federal highway area, no new projects have come to the market for nine months due to the provisional budget management[3].
References: [1] ntv.de [2] dpa [3] Bundesministerium der Finanzen [4] ifo Institute [5] HDB [6] Autobahn GmbH
- The concerns in the construction sector regarding the ongoing federal budget crisis in Germany, including delays in implementing the special fund, have led industry experts to question the community and employment policies, particularly those related to infrastructure and finance.
- As the German government responds to the crisis with a high-borrowing budget, there is speculation about the impact on the business sector, politics, and general-news, with potential shifts in spending priorities between defense and civil infrastructure development.
