Demands for Investment in Digital Economy Amid Infrastructure Fund Plans

The recent discussions among the Union and SPD regarding a special infrastructure fund of EUR500 billion have sparked significant interest from Germany's IT and digital sectors, which are now seeking a substantial share of these funds.

Ralf Wintergerst, the president of Bitkom, Germany's digital industry association, has called on the incoming government to allocate EUR100 billion towards a digital pact. This request comes as the CDU/CSU and SPD parties have agreed to relax the constitutional debt brake to accommodate defense spending and to establish this large infrastructure fund.

Wintergerst emphasized that 20% of the proposed fund should be directed to the digital economy over the next five years to support the ongoing digital transformation of both business and governmental operations. He specifically highlighted the need for investments in artificial intelligence, quantum computing, and the establishment of a 'Germany Stack'--an initiative aimed at enhancing Germany's role in global chip production. The goal, according to Wintergerst, is to secure Germany's digital sovereignty.

Bitkom suggests that the funds for the digital pact should primarily come from the federal resources allocated for the infrastructure fund. To improve educational technology, they propose utilizing a portion of the funds intended for regional governments, which handle education policy. Wintergerst cautioned that investments must yield long-term benefits to relieve future generations of financial burdens.

Verena Pausder, the chairwoman of the German Startup Association, expressed skepticism regarding the notion that financial resources alone will drive economic growth. She acknowledged that while a special fund could provide financial flexibility, it is not designed to stimulate economic activity directly. However, she concurred that supporting future technologies and digitalization is beneficial for the German economy.

Other industry representatives, including the Federal Association for Artificial Intelligence and the Internet Industry Association (eco), called for substantial investments in the digital sector, although they did not specify exact amounts. Oliver Süme, the chairman of eco, indicated that a significant portion of the fund should be allocated to digitalization efforts. Both associations underscored the necessity for structural reforms to accompany the fund, such as reducing bureaucracy, streamlining application and approval processes, and minimizing reporting obligations, particularly for small and medium-sized enterprises.

Similarly, the Telecommunications Association (Breko) expressed doubts about the fund's potential to accelerate fiber-optic expansion. They argued that simply increasing state funding would not address the 39% rise in construction costs since 2021, and that a competitive and investment-friendly policy is required, along with more efficient approval processes.

Advocates from the AI sector and eco also called for the establishment of a digital ministry to oversee the distribution of funding, prioritize needs, and strategically invest in projects and companies. This sentiment was echoed by industry leaders, including Telekom's CEO, who also supported the idea of a dedicated digital ministry.

The proposal to amend the debt brake and establish the infrastructure fund is pending approval in the Bundestag. Due to the complex political landscape, the current coalition lacks the necessary two-thirds majority to amend the constitution independently, necessitating support from either the Green Party or the FDP.