The municipal investment backlog continues to grow: 215.7 billion euros affected!

The municipal investment backlog continues to grow: 215.7 billion euros affected!

The investment backlog of municipalities in Germany reached a new record in 2023 and increased by 15.9 percent to a total of 215.7 billion euros. This corresponds to an increase of 29.6 billion euros compared to the previous year behoerden-spiegel.de reported. The results are based on a comprehensive survey carried out by the German Institute for Urban Studies (Difu) for the KfW municipal panel.

School buildings are particularly affected, accounting for the largest share with a backlog of 67.8 billion euros (31 percent of the total investment backlog). The road and transport infrastructure is also heavily burdened with an amount of 53.4 billion euros (25 percent of the backlog). The problem not only affects small communities, but also larger cities. In cities with more than 50,000 inhabitants, almost 90 percent of municipalities report a significant investment backlog, while in municipalities with 2,000 to 5,000 inhabitants around 50 percent are affected.

Financial situation and future outlook

The financial situation of the municipalities is rated as “sufficient” or “poor” by two thirds. Over 90 percent of those surveyed expect their financial situation to worsen in the coming years. Dr. Dirk Schumacher, chief economist at KfW, emphasizes that a targeted and unbureaucratic distribution of funds from the special infrastructure fund is urgently needed.

Regarding planned investments, current data shows that municipalities are planning investments of 48 billion euros for 2025, after 47 billion euros in the previous year and 43 billion euros in 2023. However, it should be noted that not all planned investments will actually be implemented, which is due to various non-monetary barriers. These include, among other things, a lack of staff in building authorities as well as complex approval and documentation procedures.

Special federal states and challenges

According to Difu, dissatisfaction is particularly pronounced in the federal states of North Rhine-Westphalia, Hesse, Rhineland-Palatinate and Saarland. In comparison, Bavaria and Baden-Württemberg show less frustration with regard to the investment situation. In addition, Difu director Carsten Kühl points to the increasing need to catch up with school buildings, especially due to the legal right to all-day care, which will apply from 2026.

In summary, it can be said that the infrastructure in Germany urgently needs to be improved. The investment backlog not only affects schools and roads, but also affects other areas such as administrative buildings, daycare centers, sports facilities and the fire department. According to the analysis of the KfW municipal panel, it is crucial that the necessary financial effort is made to bring the infrastructure into an appropriate condition in order to improve the quality of life of citizens.