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Local government finances in Germany are on a rollercoaster ride. Last year's record deficits, driven largely by social spending, are continuing. The ‘investment booster’ threatens large additional tax losses. On the other hand, the infrastructure package promises relief for local government investment gaps. And in the talks with the federal states, the Chancellor has promised compensation for municipal tax losses. Any short-term relief is welcome to those affected. However, the structural problem of the missing and unachievable connectivity between the federal government and the municipalities requires a structural solution, states Michael Thöne in heute journal up:date. He explains further on LinkedIn.
Municipal investment and large investment backlogs are well-known indicators of the financing and implementation constraints faced by German cities, municipalities and districts. The federal government's €500 billion infrastructure package is intended to provide some support in this area, too. However, the municipal infrastructure of the future will differ greatly from that of the past. In particular, it will be important to transform long-lived capital stock towards climate neutrality and avoid carbon lock-ins. The associated public finance and local political challenges were examined in a research project funded by the Sparkassen-Finanzgruppe's Stiftung für die Wissenschaft – see the new FiFo Report No. 37.
Defence, productivity, trade, research – Europe's global challenges are also its greatest opportunities. The high-level panel discussion at the EESC on European public goods offers a great chance to look at the tasks, funding and practical implementation of a ‘more European EU’. Eulalia Rubio, Marco Buti, Charles Wyplosz, Michael Thöne and others will be discussing these issues with the EESC on 5 June 2025 at 2.30 p.m. and, if you wish, with you too. Webstream and Sli.do participation via this link.
What does resilient water management cost in North Rhine-Westphalia? What would be the cost of inaction in adapting to climate change? How can the financing instruments for water and wastewater management and water protection be strengthened and further developed? These questions will be examined in a study being prepared by FiFo Cologne in collaboration with the Osnabrück-based Gesellschaft für Wirtschaftliche Strukturforschung (GWS) on behalf of the North Rhine-Westphalian state parliament's Enquete Commission on “Water in Times of the Climate Crisis”. At the kick-off meeting on 12 May 2025 in the state parliament, the project team presented its research plan to the Enquete Commission.
The Federal Ministry of Labour and Social Affairs has published its report on old-age income in Germany (ASID 2023) online. The report, which was prepared for the first time by the survey specialist infas in cooperation with FiFo Köln, mark an important steps forward: Among other things, the survey was gender-balanced throughout for the first time. With the help of a tailor-made tax microsimulation model, FiFo project manager Eva Gerhards also ensured that apples are no longer being compared with oranges: all types of income are now reported as net income. This creates a reliable data basis for further research.