German state investments surge 12.3% in 2025 to highest level since 2000, driven by 47.7% jump in defense equipment spending
Government gross investments reached €147.5 billion last year, with equipment outlays skyrocketing 47.7% thanks to a special defense fund. Construction investment, meanwhile, grew only 2%, and the investment-to-GDP ratio remains below the EU average.
Record surge in public investment
Germany's federal, state and local governments invested a total of €147.5 billion in 2025, 12.3% more than in 2024, the Federal Statistical Office reported on Monday. That is the biggest percentage increase since 2000, when investments jumped 11.3%. The only slightly larger rise came in 1999, when a 14% gain was recorded because of statistical effects linked to the rail reform and spin-offs of Deutsche Bahn subsidiaries. The jump was mainly driven by a massive expansion in equipment spending.
- 2022
- 9 %
- 2023
- 4.2 %
- 2024
- 9.3 %
- 2025
- 12.3 %
Equipment spending leaps, construction lags
Equipment investments, movable assets that include military hardware, climbed 47.7% in 2025. The statistics office attributed the surge to "additional spending on military weapon systems and other Bundeswehr procurements." In 2024, by contrast, equipment investments had grown by only 7.6–8%. Construction spending rose just 2%, a sharp slowdown from the 10.2% increase in 2024, partly because construction prices had already risen sharply in prior years. Other investments, mainly in research and development and software, increased by 5.2%.
- Equipment
- 47.7 %
- Construction
- 2 %
- Other (R&D, software)
- 5.2 %
EU comparison: Germany still trails
Germany's public investment accounted for 3.3% of gross domestic product in 2025, well below the EU average of 3.9%. Several European partners posted higher ratios: the Netherlands at 3.5%, Italy 3.8%, Austria 3.9%, France 4.5%, and Poland 5.4%. The share of gross investment in total government spending rose to 6.5%, from 6.1% in 2024 and 5.9% in 2023, suggesting that investment grew faster than overall expenditure. In the first quarter of 2026 the investment growth rate softened to 3.2%, slightly below the EU and eurozone average of 3.3%.
- Germany
- 3.3 %
- Netherlands
- 3.5 %
- Italy
- 3.8 %
- Austria
- 3.9 %
- France
- 4.5 %
- Poland
- 5.4 %
- EU average
- 3.9 %
Economist warns of special fund misuse
Sebastian Dullien, scientific director of the Institute for Macroeconomics and Economic Research at the union-affiliated Hans-Böckler Foundation, welcomed the figures but urged caution.
His institute's estimates suggest a substantial share of the special-fund money has been used indirectly for non-investment purposes, such as reducing the VAT rate for the hospitality industry, financing the so-called Mütterrente or lowering the corporate tax rate.The government must ensure that the additional borrowing from the special funds is actually fully channeled into new investments.
Gross investment of the state has grown more strongly in the last two years than total government spending.
