With its decision to amend the debt brake in the constitution and make a special fund of 500 billion euros available for additional public investment over a period of twelve years, the German government sent a clear signal of change in the summer of 2025 and demonstrated its willingness to improve the difficult economic situation of Germany. Of this special fund, 1.92 billion euros are earmarked for Mecklenburg-Vorpommern. These funds offer great potential for increasing growth prospects at federal and state level.
How can the state government of Mecklenburg-Vorpommern, in line with German economic policy, invest the additional funds wisely and generate growth momentum for the state? This brief analysis addresses this question.
The authors see three requirements for this:
- Firstly, both the federal and state governments must actually make these investments in addition to those already planned in the budget and, as far as possible, in a way that promotes growth.
- Secondly, this fiscal stimulus must be accompanied by reforms in federal economic policy, particularly with regard to growth effects.
- A third requirement is a bold and coherent economic policy at the state level, in this case in Mecklenburg-Vorpommern. This includes bold steps to dismantle regulations at the state level, ideally in a competition between local authorities (keyword: special economic zones), better integration of education policy with the state's competitive advantages in climate policy, and a reorientation of energy policy; for the latter, the state government should join forces with other Northern German coastal states.
The plans to invest the special fund in its entirety are only truly convincing if the additional funds do not crowd out other investments in the core budget, meaning that there will be no ‘shunting yard’ effect. This applies equally to the federal government and the federal states and cannot be clearly assessed from today's perspective. As the study shows, investments in the regular budgets of the federal government and Mecklenburg-Vorpommern are being reduced according to current plans, while at the same time investments from the special fund are to be expected. Only if the funds for additional investments can be used for capital that has the potential to promote growth, will the special fund be able to generate or support the necessary growth momentum at the state level, in this case in Mecklenburg-Vorpommern. Education, research, digitalisation and mobility appear to be important for the federal state, while consumption-oriented investments may be desirable and ostensibly popular, but cannot generate this momentum.
With the above-mentioned package of measures, there is a good chance of increasing growth potential in Mecklenburg-Vorpommern with the help of the state's share of the federal government's special fund and creating a spirit of optimism.
Read the entire analysis “Sondervermögen, Infrastruktur und Klimaneutralität: Eine wachstumspolitische Kurzanalyse für Mecklenburg-Vorpommern” here as a PDF. Please note, to date the analysis is only available in German.
