Germany's construction industry has revised its business expectations for the current year downwards with the sector now expecting sales to fall by 4% instead of 3.5%, the Federation of the German Construction Industry said on Tuesday.
This is primarily because the federal, state, and local governments are anticipated to decrease their spending on public construction projects this year, as a result of expected reductions in tax revenues.
The association emphasized that investment is particularly important now.
A commissioned report for the sector by the German Economic Institute (IW), which is closely linked to employers, projects that spending on housing construction alone would need to rise by around €20 billion ($21.8 billion) annually after adjusting for inflation, compared to the 2022 level.
The institute estimates that around 350,000 homes will have to be built each year to meet demand, but the sector is falling far short of achieving such figures.
The institute also sees an increased need for investment in federal roads and motorways.
"Without an improvement in infrastructure, Germany's competitive situation cannot be improved, and without more investment in existing buildings, the climate protection targets cannot be achieved," said IW study author Michael Voigtländer on Tuesday.
Construction industry president Peter Hübner criticized excessive bureaucracy in particular as a major hurdle for the industry.
"No sector is as thoroughly regulated as construction," he said. "The picture is characterized by diverse and constantly new government regulations, outdated rules and barely digitalized public administration."