Federal government's digital budget amounted to over 60 billion € in four years
An elaborate study shows that the federal government has doubled its budget for digitalization. However, Germany is still lagging behind in terms of impact.
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The federal government's budget for digitalization has doubled since 2019 and amounted to around 19 billion euros in 2024. The planned expenditure for digital topics was therefore higher last year than the entire budget of the Ministry of Health, for example (16.7 billion euros). This was the result of a study conducted by the Leibniz Centre for European Economic Research Mannheim (ZEW) on behalf of the Agora Digital Transformation think tank.
The coronavirus pandemic has driven up spending on digitalization, commented Stefan Heumann, Managing Director of Agora Digitale Transformation. "Nevertheless, the gap between Germany and EU countries in terms of administrative digitalization has widened further in recent years." More money does not mean more impact, he emphasized. The main thing is to create the right framework for digital solutions.
Over 60 billion euros in four years
In the 2019, 2021, 2023 and 2024 financial years, the federal budget for digitalization totalled over 60 billion euros , according to the study. The largest chunk was made up of funds for the digitalization of the administration (16.6 billion euros), followed by those for digital infrastructure (13.8 billion), research and innovation in the field of digitalization (12.8 billion) and digitalization in the Bundeswehr (11.9 billion). The share of digital items in the overall federal budget rose from 2.7 percent in 2019 to 4.5 percent at its peak in 2023.
"In addition to the size of the budget, the effective use of public funds is also crucial for a successful digitalization policy," said Thilak Mahendran, Innovation Lead for Digital Government Action at Agora Digitale Transformation. "In this respect, budget funds for digitalization should not only be quantified, but the results of their use should be carefully evaluated."
20,000 budget items evaluated
However, the ZEW researchers had to go to great lengths to quantify the expenditure. This is because the expenditure is spread across all departments and countless budget titles. The researchers initially analyzed over 20,000 budget titles automatically, using a text analysis with keywords and a machine learning approach, among other things. This was made more difficult by the fact that the complete budget plans were only available in the form of PDFs.
Using machine learning methods, the researchers identified almost 6,000 titles as "potentially digital", which they then examined manually. Due to this high effort, they left out the financial years 2020 and 2022.
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"There is a lack of a uniform system to create transparency for digital expenditure," said Thomas Niebel, co-author of the study from the ZEW Research Department "Digital Economy". Politicians must ensure greater clarity here, as digitalization represents "one of the major transformations of this country".
States and municipalities are also investing billions
As the ministries often do not manage to spend all of their budget funds (such as for the National Education Platform), the actual expenditure may be lower than the target values stated in the study. However, the ZEW researchers did not evaluate any special funds (such as those of the German armed forces). The expenditure of the federal states and local authorities was also not considered. These also invest a considerable amount in digitalization. It is therefore difficult to estimate how much the state is spending overall on modernizing its administration, for example.
(cwo)
