What the €500 billion fiscal stimulus package means for the Mittelstand

The €500 billion special-purpose fund for infrastructure and climate neutrality is putting substantial additional public capital to work in modernising the country. For the Mittelstand, this is less a short-term fiscal stimulus package than a predictable source of demand over many years – and thus a structural driver of growth.

Designed to operate over a twelve-year period, the fiscal stimulus package has a total volume of 500 billion euros. According to the Federal Government, public investments are set to exceed 120 billion euros in 2026, with around 58 billion euros drawn from the fiscal stimulus package. The focus is on transportation and hospital infrastructure, digitalisation, energy infrastructure, as well as research and development.

The impact is also visible at macroeconomic level. In its latest forecast, the ifo Institute expects growth of 0.8 per cent in 2026, with the same rate forecast for 2027. Fiscal policy is expected to contribute around half a percentage point to growth each year. Without this fiscal tailwind, the German economy would currently be barely growing. 

For mid-sized companies, the crucial question is where this capital ultimately flows. The principal beneficiaries are suppliers to railway technology and building materials, medical technology, hospital equipment, IT and network infrastructure, and energy and heating technology. Many of these sectors are characterised by mid-sized companies and stand to benefit from a multi-year commitment of funding that offers a degree of planning certainty not seen for many years.

Against this backdrop, financial investors will need to look more closely at the extent to which a business model is positioned to benefit from publicly funded investment programmes – whether through capacity, certifications or public-procurement expertise. If portfolio companies are aligned with this demand at an early stage, they can combine structural market growth with operational value creation. Public funding is no substitute for a value-creation agenda; it is, however, a catalyst for sustainable growth.