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Municipal Finance in Germany – Caught Between Investment Needs and Transformation Pressures
German municipalities are facing mounting fiscal challenges. In 2024, they recorded the largest deficit in the history of the Federal Republic, while the municipal investment backlog surpassed €200 billion for the first time. These pressures are intensifying as cities confront major financial demands tied to the energy and heating transition needed to meet climate change goals. Amid calls for fiscal consolidation, Dr. Henrik Scheller argued that linking local investment strategies with ecological and social sustainability is more crucial than ever. His talk explored why such an integrated approach is essential — from meeting EU regulatory requirements to mobilizing private capital — and highlighted emerging approaches and strategies that are shaping Germany’s municipal finance landscape.
Speaker:
Henrik Scheller has led the Economy, Public Finance, and Sustainability Indicators team at the German Institute of Urban Affairs (Difu) since 2015, and serves as Deputy Head of the Infrastructure, Economy, and Finance research department. At Difu, he is responsible for a wide range of interdisciplinary projects on municipal finance and budgeting, with a focus on public investment and infrastructure planning issues. Before joining Difu, Henrik served as Interim Professor for Politics and Governance in Germany and Europe at the University of Potsdam. Other past roles include leading the Demographic Change Action Program project and Federal Government – States and Federalism Reform II module at the Bertelsmann Foundation, as well as leading the Hamburg’s Public Finances – Development and Future project at the Hamburg Institute of International Economics.