Germany's EUR 500 Billion Infrastructure Fund: A Shot in the Arm for the Construction Sector

On 4 March 2025, the likely future coalition government in Germany announced plans to establish a EUR 500 billion infrastructure fund to finance projects in sectors such as roads, railways, bridges, energy grids, and housing over the next 10 years.

Key Highlights
-- Germany's EUR 500 billion infrastructure fund will boost demand for construction services, providing a shot in the arm for the ailing construction sector.
-- Potential beneficiaries will include major engineering, procurement, and construction (EPC) players, such as Hochtief and Bilfinger and homebuilders.
-- Beneficiaries from allied sectors include Heidelberg Materials, Thyssenkrupp, and Siemens Energy AG.

Gaurav Purohit, Vice President, European Corporate Ratings, Asset Finance said, "We foresee the implementation of large-scale public infrastructure projects pushing up construction activity markedly, possibly to levels last seen in the 1990s. However, we caution that it will take time until benefits from a ramp-up in construction spending will start meaningfully contributing to revenue and cash flow generation for the EPC companies. This is because the regulatory environment is complex, while planning and approval processes are notoriously lengthy. Without any upfront investment in reducing bureaucracy, capacity building, and simplifying project approval processes, benefits may well be partly offset by rising overhead costs to navigate projects toward shovel-ready status."