500 billion euro package: hopes and worries in the construction sector in Saxony

500 billion euro package: hopes and worries in the construction sector in Saxony

On May 21, 2025, the federal government announced a 500 billion euro infrastructure package, the largest investment package in Germany's history. This announcement has made the construction industry sit up and take notice as it sees a glimmer of hope for an imminent recovery. However, Tim-Oliver Müller, Managing Director of the Main Association of the German Construction Industry, is of the opinion that concrete orders must follow in order to realize the positive effect of the package. According to Müller, many projects have not yet been specifically planned.

Currently, the industry is only at about 70 percent capacity, meaning there is potential for an increase of 20 to 30 percent. Saxony's Economics Minister Dirk Panter (SPD) expressed the expectation that the construction boom will begin from 2026 as soon as the implementing law has been passed by the Bundestag. The package earmarks 391 million euros annually for Saxony, some of which will be passed on to municipalities.

Challenges for the construction industry

Despite the optimistic announcements, there are also critical voices. Oliver Holtemöller, Vice President of the Leibniz Institute for Economic Research, warns of price increases in construction and fears that an oversupply of government demand could fuel the price spiral while supply remains limited. This could be further exacerbated by the ongoing skills shortage, which is causing many construction projects to stall.

An example of the challenges in the construction industry is the dilapidated bridge at Damaschkeplatz in Magdeburg. The start of the renovation failed due to a lack of planning and unclear use of funds. Against this background, politicians are faced with the need to invest quickly and sustainably to ensure the success of the infrastructure package.

Progress in Mainz

The city of Mainz offers a brief example of the current building situation. 195 construction sites are planned there this year, including the expansion of district heating pipes and the renovation of water pipes. One particularly notable project concerns the tram expansion, which will result in a two-month closure of a major artery. It is estimated that tens of thousands of residents will be affected by this measure.

Elmar Schnorpfeil, managing director of a construction company, sees great opportunities for the construction industry, but at the same time has criticized the lack of investment in recent decades. He refers to the Pellmann Commission, which 25 years ago described the state of the infrastructure as underfunded. He also complains that bureaucratic hurdles and constantly changing laws are unnecessarily slowing down construction projects.

The discussion about the planning and approval procedures is supported by Tim-Oliver Müller and the Central Association of the German Construction Industry (ZDB), who are calling for reforms to accelerate investments. The SPD also refers to the German Pact to speed up planning processes, but remains vague about specific reform projects. The Union faction would like to wait for further coalition negotiations before simplifying planning law.

Overall, it remains to be seen whether the hoped-for positive effect of the infrastructure package will actually materialize. However, the construction sites and the public infrastructure currently clearly show how much work still lies ahead of those responsible.