Press Release from 2025-07-01 / Group, KfW Research
KfW Research: Municipalities complain about worsening investment backlog
- KfW Municipal Panel: Perceived investment backlog grows by 15.9 per cent to EUR 215.7 billion
- Problems worst in schools, roads and transport infrastructure
- Municipalities plan to invest a total of EUR 48 billion in 2025
Municipalities in Germany report a steadily growing investment backlog. In the KfW Municipal Panel annual survey they put the perceived investment backlog at EUR 215.7 billion. That is a record level and marks an increase of 15.9 per cent or EUR 29.6 billion over last year. The perceived investment backlog is the total sum that municipalities would have to invest today to restore their infrastructure to an appropriate state in terms of quality and quantity.
The KfW Municipal Panel is based on a representative nationwide survey of treasuries of cities and municipalities with more than 2,000 inhabitants and of all county districts. The survey has been conducted annually since 2009 by the German Institute for Urban Affairs (Difu) on behalf of KfW Research. The survey for the most recent KfW Panel was conducted between January and March 2025.
Once again, the greatest investment backlog was seen to be in school buildings. Municipalities reported that total investment of EUR 67.8 billion was needed – 31 per cent of the total backlog. Schools are followed by roads and transport infrastructure, with a backlog of EUR 53.4 billion or 25 per cent of the total.
“The strong rise in the figure for school buildings could be a result of the legal entitlement to all-day primary schools as of 2026. Local authorities are now realising that they have a lot of ground to make up,”
said Dr Dirk Schumacher, KfW Chief Economist.
A total of 56 per cent of municipalities reported a significant or serious investment backlog for school buildings. There is a robust correlation between investment backlogs and the size of the local authority. While slightly over half of all municipalities that are home to between 2,000 and 5,000 reported significant or serious investment backlogs in school buildings, the figure rose to almost 90 per cent of towns and cities with a population of more than 50,000. A backlog was also reported significantly less frequently in southern German municipalities than in North Rhine-Westphalia or in the south-west of the country (Hesse, Rhineland-Palatinate and Saarland).
The investment backlog results also from problems with upkeep and maintenance. Overall, 19 per cent of all municipalities stated in the survey that they can invest little or nothing in the upkeep of their infrastructure. That figure is five percentage points higher than last year. In road maintenance, the figure was even 32 per cent, which is up 6 percentage points over the previous year.
To address this situation, municipalities plan to invest a total of EUR 48 billion in 2025. In 2024 the figure was EUR 47 billion and in 2023 EUR 43 billion. However, not all planned investments are actually made. According to extrapolations, in 2024 only EUR 30 billion were actually spent.
“This is where non-monetary factors come into play – staffing constraints in the planning authorities, complex documentation requirements and protracted planning and consent procedures,”
explains Dr Dirk Schumacher.
"The German government’s special infrastructure fund will also benefit municipalities. It is important to distribute funds in a targeted fashion, but with as little red tape as possible.”
You can find the KfW Municipal Panel at www.kfw.de/kommunalpanel
A diagram showing the perceived investment backlog in municipalities is available here: Infografik Investitionsrückstand Kommunen (in German)
On behalf of the German Federal Government, KfW runs numerous programmes that support municipalities. You will find more information at Public Institutions | KfW
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