Overview

• The lower house approved allocating €100 billion from the €500 billion special fund to the Länder, to be distributed by the Königsteiner Schlüssel, with about 21.1% for North Rhine-Westphalia and roughly 0.9% for Bremen, pending Bundesrat sign-off.
• The law sets no mandatory pass-through to municipalities, prompting the German Association of Cities to push for fast, low-bureaucracy distribution, while Sachsen-Anhalt signals a 60% municipal share and Thuringia plans a separate top-up program.
• Eligible spending spans transport, civil protection, hospitals and care homes, energy infrastructure, education facilities and digitalization, limited to projects not started before early 2025 with approvals allowed through the end of 2036.
• Parliament also loosened Länder debt rules by creating a structural borrowing margin of 0.35% of GDP, with Bremen and Saarland expected to benefit on the same terms if the Bundesrat agrees.
• The Bundesrechnungshof labels the Länder framework "substanzlos" for lacking enforceable controls, and economists including IW and ifo warn the fund risks replacing core-budget investments, citing rail as an example.