Merz‘ 600-Milliarden-Euro-Verteidigungsoffensive breitet sich in ganz Deutschland aus

*From Bloomberg News reporters Alexander Weber and Kamil Kowalcze:*

Chancellor Friedrich Merz has earmarked an initial €600 billion for Germany’s military as Donald Trump voices his frustration with guaranteeing Europe’s security.

What began as geopolitical necessity, however, is becoming meaningful economic stimulus as streamlined procurement helps producers secure record orders for everything from artillery shells to attack drones. Banks are also making loans more readily available.

A crucial strand of Merz’s military drive is that it’s effectively exempt from his nation’s tight fiscal rules — meaning it may yet far eclipse a parallel splurge on infrastructure that’s capped at €500 billion.

Meanwhile, a german publication released this article today:

[https://www.zeit.de/wirtschaft/2026-03/verwendung-sondervermoegen-missbrauch-98-prozent-schulden](https://www.zeit.de/wirtschaft/2026-03/verwendung-sondervermoegen-missbrauch-98-prozent-schulden)

Translated with [Claude.ai](http://Claude.ai)

**How the Special Fund Is Being Squandered** *A year ago, the Bundestag approved a massive debt package for new investments. A study suggests that 95% of the money has been diverted from its intended purpose.*

By Dr. Kolja Rudzio and Julian Stahnke — March 17, 2026

Why does it matter how the new debt from the special fund is used? Debt is not inherently bad — there are good and bad reasons to take out a loan, for a government just as for a private household. If someone goes into debt to fund a lifestyle they can’t really afford — frequent holidays, expensive brand clothing, regular restaurant visits — that’s unsustainable, because repayment will eventually come due. But if someone takes out a loan to buy an apartment, it can pay off financially, through saved rent and potential appreciation. In one case, debt finances consumption; in the other, it enables investment — spending that generates future returns.

For governments, debt is always also a question of fairness. Future taxpayers don’t directly benefit from current consumption spending — like pension subsidies, civil servant salaries, or fuel tax relief — yet they must cover interest and repayments. Investment is different: a bridge that stands for 50 years also benefits people not yet born. It’s therefore justified to have future users share in the financing. What would be problematic is living on credit today and leaving the next generation two problems at once: crumbling infrastructure and high debts.

The ifo Institute study now suggests that this is precisely what is happening with the special fund — and that so far the money has not been used for additional investment, at least to a large degree. *“It has been diverted through roundabout means,“* says ifo researcher Emilie Höslinger.

The federal government justifies the shifts by arguing that the goal was simply to consolidate investment spending for specific purposes in one place, and that overall funding for broadband expansion and transport infrastructure has increased. But the ifo research team — including Höslinger and Max Lay — did not just look at individual budget lines; they examined the total sum of all investments. Their conclusion: the new debt has, on balance, barely generated any new investment.

To get a complete picture, the researchers added up all investments from 2024, taking into account both the regular budget and an existing special fund, the Climate and Transformation Fund (KTF). Their calculation found that a combined €68.6 billion was spent on investments from both sources — this figure serves as the baseline for their analysis.

*“Debts were taken on to plug budget holes,“* Höslinger summarizes. This contradicts various promises made when the special fund was approved a year ago. At the time, Friedrich Merz justified the new debt package by citing *“decades of accumulated renewal needs in our infrastructure.“* SPD leader Lars Klingbeil promised investments that would *“relieve the economy and stimulate growth.“* And Greens politician Britta Haßelmann stressed that *“additionality“* had been agreed upon — that this was the decisive point. The constitutional amendment passed at the time explicitly states that the special fund serves *“for additional investments in infrastructure and for additional investments to achieve climate neutrality“* (Article 143h).

The ifo study confirms what many experts had already feared when the budget plans were published last year. In November, the German Council of Economic Experts warned that less than half of the planned spending from the new special fund through 2030 would qualify as „investment,“ meaning the fund would have *“only a minor positive effect on GDP.“* The Federal Audit Office called in August 2025 for stronger rules to ensure that *“no investments are shifted from the federal budget into the special fund.“* And the Bundesbank warned that a large share of the fund’s resources would be earmarked for other purposes — and that federal infrastructure investment had actually *declined* last year.

The Bundesbank’s figures suggest the situation could be calculated even more harshly. The ifo team itself tested various alternatives — different comparison periods, investment as a share of the budget rather than in absolute terms, different definitions of investment. But regardless of the methodology, the result was always the same: a disturbingly high share of the new debt did not generate additional investment. The range runs from 77% to 105%. Over 100% means investment actually *fell* compared to before — a result obtained when using the Bundesbank’s stricter definition of investment.

The federal government calculates things very differently. According to its figures, investment rose by €12.3 billion between 2024 and 2025 — significantly more than the ifo estimate, but still implying that only half of the funds disbursed from the special fund (€24.3 billion) actually resulted in net additional investment. This calculation also relies on federal accounting rules that apply a particularly generous definition of what counts as investment.

Under those rules, even emergency loans extended to the Federal Employment Agency, health insurers, and long-term care insurers — used to plug short-term billion-euro gaps last year — count as „investment.“ Many economists consider this questionable. The law governing the special fund does not foresee such payments as investments either, though federal budget rules technically allow it. Those same rules also permit debt to be called „assets“ — which is exactly why *Sondervermögen* (literally „special assets,“ i.e. the special debt fund) was named Germany’s Word of the Year 2025 in the „worst word“ category.

If the special fund is genuinely being misused, could one not bring legal action? The Basic Law states that the additionality criterion is met *“if an adequate investment ratio is achieved in the respective budget year,“* with a federal law to specify the details.

The law establishing the Infrastructure and Climate Protection Special Fund sets the bar as follows: if investments make up at least 10% of the regular budget, anything beyond that counts as „additional.“ This is already a fairly low threshold — in 2024, the investment share was already 10.8%, as the ifo researchers calculate. This means the government could actually *reduce* investment in the regular budget slightly and still be legally considered to have invested „additionally.“

It gets even more absurd. According to the law, all that’s required is that *planned* investments reach the 10% mark. *“What matters is the planning in the budget, not what is actually spent,“* says Henning Tappe, professor of fiscal and tax law at the University of Trier. So investments don’t actually need to happen — they just need to be planned. Or merely stated as planned. *“Obviously fictitious figures must not be written into the budget plan,“* Tappe adds, *“but this could have been regulated much more carefully — in the rush at the time, the work wasn’t thorough enough.“*

In practice, the grandly announced investment plans often diverge substantially from what actually happens. This is why the ifo researchers focused on actual payments made. And there they found that, to a large extent, the additional debt last year did not translate into more investment. *“It is urgently necessary to correct this policy in the coming years,“* says ifo president Clemens Fuest. His institute’s research group intends to report regularly going forward on how money from the special fund is actually being used.

The real question is how well this money will be spent. Large infusions of cash, while necessary tends to lead to some „inneficiencies“.