Freitag, 26. Juni 2009

Germany's Fiscal Stimulus

As part of the fiscal stimulus package, the German government decided some months ago to provide up to 13 bn € to finance infrastructure and education projects. That's 0.6 % of GDP, i.e. a significant sum.

Today's FTD reports that to date, only 11 m € have been paid out. That's not as bad as it sounds, as payments are only made upon completion, and you can't expect infrastructure investments to be completed so quickly.

However, it is worrying that applications for funding (which need to be made before work can start) are also quite low:

Nordrhein-Westfalen is one of the most active states in terms of applications. But even though it accounts for more than 20 % of Germany's GDP, total applications to date are only for 422 m €, and work has only started on 40 % of those projects.

Even assuming that all other states end up applying for a similar amount of projects as Nordrhein-Westfalen, total volume for Germany as a whole would only reach 2.1 bn €, i.e. 16 % of the stimulus budget, or barely 0.1 % of Germany's GDP.

So much for the effectiveness of infrastructure stimulus spending...

(The FTD also notes that 2008's federal package for childcare projects was 2 bn €. However, only 68 m € of it was used.)

1 Kommentar:

  1. A major reason could be that municipalities are starting to feel the recession and have to cut down on investments.

    Example (and this is certainly no singularity): (in German)

    Sounds catastrophic to me.