Debt and growth: Germany's new investment course under pressure!

Debt and growth: Germany's new investment course under pressure!

On May 30, 2025, the discussion about the federal government's future debt policy became more explosive. Manuel Koch, editor-in-chief of Inside Wirtschaft, speaks in detail about the financial challenges facing the country. In an interview with financial journalist Jessica Schwarzer at the Frankfurt Stock Exchange, he emphasized the crucial importance of using debt for Germany's future growth. Koch emphasizes that good investments in construction, digitalization or education could enable growth of six percent by 2035. In contrast, debt used for political spending or to fill pension gaps could lead to zero growth.

Koch also points out that investors should pay close attention to where investments are going, as some sectors have great potential. Otherwise, he warns, a large mountain of debt could arise that future generations will have to bear. This reflects society's concerns about the long-term impact of current financial policies.

Bundestag approves new debt

In the context of this discussion, the Bundestag recently approved a financial package that includes 500 billion euros for defense and infrastructure over the next twelve years. Financing is carried out through loans, which means that a “special fund” was created as an exception to the debt brake. This means that Germany will be able to take on more debt for defense and security in the future, after the previous limit of one percent of economic output was suspended. This measure represents the highest level of borrowing by the German state.

A current study by the German Economic Institute shows an interesting picture of opinion. Younger respondents aged 18 to 34 are more likely to support increased government debt in certain areas, while older respondents mostly support defense debt. These different views are primarily due to the changing security situation, in particular the US threat under President Trump to withdraw military support.

Concerns and perspectives

Experts have said that Germany can afford the loans because the debt ratio is comparatively low compared to other countries. Nevertheless, young people show a positive attitude towards investing in infrastructure, but express concerns about loan repayment and possible tax increases in the future. Some voices are calling for a redistribution of wealth or fewer subsidies abroad to secure financing of the new debt.

The approval of the amendment to the Basic Law that enables these financial measures was greater than expected. She received support from major political parties such as the CDU, SPD and the Greens. Economist Marcel Fratzscher emphasizes that smart investments in infrastructure and education can not only increase Germany's economic performance, but will also benefit future generations.

In view of these developments, it is clear that the debate about debt and investments in Germany remains explosive and the decisions of the current federal government will have far-reaching consequences.

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Inside Economy and ZDF.