German Rail Network’s Renovation Funding Uncertain After Constitutional Court’s Ruling

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German Rail Network's Renovation Funding Uncertain After Constitutional Court's Ruling

The German Rail Network is in need of renovation: defective concrete sleepers, damaged tracks, outdated signal boxes. A major overhaul is urgently required and was actually firmly planned. However, the financing for this massive task is now uncertain, as reported by the Frankfurter Allgemeine Zeitung.

Following the ruling of the Federal Constitutional Court on unconstitutional budget allocations by the coalition government, the federal government is now also withholding financial commitments to the railway.

According to experts, at least equity increases, which are part of the financing package, are not affected by the ruling. Nevertheless, Federal Finance Minister Christian Lindner (FDP) hesitates, risking a delay in the urgently needed renovation works.

Government pledged billions for railway renovation

The federal government had promised the railway almost €40 billion by 2027 for the overhaul of the network in the autumn. A part of this, €12.5 billion, was to be financed through equity increases.

According to constitutional lawyers and economists, these would not be affected by the Federal Constitutional Court’s ruling on unconstitutional budget allocations, as reported by FAZ.

However, even these equity increases, which the railway had already firmly anticipated, are now being assessed for the impacts of the ruling. The delay is dramatic for the railway, which plans to commence the overhaul in the summer of 2024. They have already awarded contracts worth billions. Without the promised funds, both the railway and the construction industry face financial constraints.

Climate and transportation policy goals at risk

The urgently needed renovation of the dilapidated infrastructure is relevant not only for millions of railway customers but also impacts climate and transportation policies. An intact infrastructure is crucial for smooth railway operations with high punctuality and sufficient capacity, especially in rail freight transportation.

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