German state investments surge 12.3% in 2025 to highest level since 2000, driven by 47.7% jump in defense equipment spending

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.

20229%

20234.2%

20249.3%

202512.3%

2022

9 %

2023

4.2 %

2024

9.3 %

2025

12.3 %

Data from the article text

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%.

Equipment47.7%

Construction2%

Other (R&D, software)5.2%

Equipment

47.7 %

Construction

2 %

Other (R&D, software)

5.2 %

Data from the article text

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%.

Germany3.3%

Netherlands3.5%

Italy3.8%

Austria3.9%

France4.5%

Poland5.4%

EU average3.9%

Germany

3.3 %

Netherlands

3.5 %

Italy

3.8 %

Austria

3.9 %

France

4.5 %

Poland

5.4 %

EU average

3.9 %

Data from the article text

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.

“The government must ensure that the additional borrowing from the special funds is actually fully channeled into new investments.”

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.

“Gross investment of the state has grown more strongly in the last two years than total government spending.”