Infrastructure projects in Germany could become significantly more expensive if demand increases as a result of the special debt-financed fund, the German Ifo institute argued today.
“It is absolutely essential to ensure that funds are used efficiently and do not evaporate due to rising prices,” said Oliver Falck, director of Ifo’s Center for Innovation Economics and Digital Transformation, quoted in the statement.
Falck argues that government investments imply considerable risks for prices.
As the special fund significantly increases demand for infrastructure projects, wages could rise, especially in sectors where there is already a severe shortage of qualified workers, says Falck.
The official also states that “in addition, property prices and the costs of construction and planning services can increase drastically”.
“Investments should be made where they have the greatest impact on growth and competitiveness – but at the same time, it should be considered whether there is sufficient capacity to implement investment projects,” says Falck.
Tim-Oliver Müller, director general of the German Construction Industry Federation, called for a faster pace of policy decisions so that the industry can prepare for the orders to come.
“Our companies need clarity as quickly as possible about when and what funds will definitely be available for roads, bridges and waterways,” he stressed.
Tanja Gönner, general director of the Federation of German Industries, expressed a similar opinion: “Accelerated approval procedures, a systematic reduction of bureaucracy and the efficient use of resources are necessary to ensure that the planned funds from the special fund can generate notable macroeconomic effects.”
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