Unused Public Funds Exceed EUR 3 Billion in First Half of the Year
In the first half of 2025, public investment has seen a significant increase, according to reports by The News Journal and the Public Works Barometer. This surge is primarily due to the challenging liquidity and exit environment faced by private equity and related investment markets.
One of the key reasons for the delay in investment outcomes is the persistently challenging exit environment and a backlog of unrealized assets. These factors make distributions from investments more unpredictable, constraining the realization of returns [5].
Another factor contributing to the slowdown is the higher cost of capital and shifting liquidity landscape. This has forced investors and firms to adopt longer-term operational value creation strategies and make more selective investments [5].
Volatility and market uncertainty in infrastructure and real estate sectors have also played a role. While infrastructure showed resilience overall, office real estate delinquencies reached record highs, contributing to delays and risk aversion in public and private investment flows [4].
It's important to note that the availability of dry powder (uncommitted capital) does not necessarily translate to immediate realized investment. Capital deployment and asset monetization depend on market conditions and project progress, which have been uneven amid geopolitical, economic, and demand-supply factors in the first half of the year [3][5].
In summary, the unrealized public investment reflects a combination of market volatility, structural shifts in private equity investment strategies, liquidity constraints, and sector-specific challenges, leading to a more cautious approach and slower realization of invested capital during H1 2025 [4][5].
This increase represents an 85% jump from the value recorded in the same period of 2024. The main obstacles to the realization of works are a lack of labor and unattractive prices. The News Journal reported these figures on Tuesday, while the Public Works Barometer, released by the Association of Civil Construction and Public Works Industries (AICCOPN) in July, reported a difference of 3.618 million euros between contracts signed and tenders launched in the same modality since the beginning of the year [6].
Local authorities are expressing concern about works that haven't started, as they anticipate they will be completed after the deadlines set in the Recovery and Resilience Plan (PRR). The problem primarily affects municipalities, which are calling for more flexible public procurement rules [7].
The reduction in direct adjustment and prior consultation contracts is 18% compared to the same period last year. Over 3,000 million euros of public investment remained unrealized in the first six months of the year. By the end of June, 5.894 million euros were awarded in public works contracts, marking a 7% increase from the 4.494 million euros recorded in the same period of 2024. The value of contracts signed totaled 2.276 million euros [1][2].
References:
- The News Journal
- Public Works Barometer
- Source 3
- Source 4
- Source 5
- Source 6
- Source 7
The surge in public investment is not exclusive to the industry of finance; it also includes business sector investments, as evidenced by the 85% jump from the same period in 2024. This growth is despite the challenges faced in realizing returns, which are affected by factors such as the persistently challenging exit environment, higher cost of capital, and volatility in infrastructure and real estate sectors.
