State investment in Germany lags

Massive reductions in corporate and income tax in the early 2000s caused
enormous losses of state revenues. In the ensuing
massive budget consolidation efforts, public investments
were among the first items to be sacrificed. This topic
is discussed in depth by Rietzler (2014).

However, since
1991 state investment has averaged only about 9 percent
of total investment, so its weakness can explain only a
very small part of the weakness of overall investment
activity.

Most of the German investment deficit must
therefore be the responsibility of the private sector. The
following analysis consequently focuses above all on
private-sector investment.