Three hurdles for the transport transition: Rail transport needs solutions!

Three hurdles for the transport transition: Rail transport needs solutions!

On May 28, 2025, the Bundestag presented significant changes to the debt brake that are intended to create new fiscal leeway for Germany. This relaxation opens up the possibility of additional investments, particularly in the area of ​​infrastructure. Nevertheless, compliance with European requirements remains a key challenge, as the federal government's spending is limited by strict rules. These regulations have proven to be particularly problematic for rail transport dezeratzukunft.org reported.

The fiscal package has enjoyed a positive response as it offers opportunities for extensive investment in rail transport. Nevertheless, German financial policies are bound to both national regulatory limits and the requirements of the Stability and Growth Pact (SGP). Before the changes to the debt brake, which were passed back in March 2025, Germany had a strict regulation that limited federal borrowing to capital spending. However, there are now concerns that this easing could lead to conflicts with EU guidelines, similar to what happened at the beginning of the monetary union, in which Germany violated the SGP's deficit criteria.

Hurdles for rail transport

A central problem are the three hurdles that stand in the way of effective use of the funds. Firstly, it standsSpending speedin focus. EU rules require rapid spending to reduce the debt ratio by the early 2030s. Secondly, the projects suffer from bottlenecksmaterials and personnel, especially in the digital area, which is essential for infrastructure expansion. Third is theControl and financing architectureinadequate, which further complicates the effective planning and execution of projects.

Additionally, it is recommended to plan the pace of spending in the long term to avoid price pressure in the markets. Data shows that the debt ratio in Germany fell until 2024. However, an increase from 62.5% in 2024 to around 63% in 2025 is now forecast. In order to meet the EU requirements by 2028, annual consolidations of around 25 billion euros would be necessary.

Financing and governance

The complexity of financing the railway is an additional challenge. The resources come from different sources, which makes transparency and traceability difficult. From the experts' point of view, a permanent rail infrastructure fund based on the Swiss model could help to ensure reliable financing and support the sustainable renewal of the rail infrastructure.

The possibility of not counting loans for defense spending over 1% of GDP against the debt brake further exacerbates the problem. Although these simplifications expand the scope for action, their implementation remains questionable due to inadequate recommendations from the Stability Council regarding compliance with European requirements. A rethinking of the institutional design of budget monitoring appears necessary so that the newly created credit flexibility can also be used in accordance with EU requirements.

Overall, German financial policy remains faced with major challenges. Although easing the debt brake could open up new opportunities for action, compliance with European rules is crucial to ensuring sustainable progress in rail transport and general infrastructure development. How wirtschaftsdienst.eu notes, a thorough overhaul of budgetary surveillance is needed to avoid conflicts and inefficient use of resources.