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Planned public investment in infrastructure projects in the United States and Europe will boost the economy in the coming years.
Euler Hermes, the world’s largest credit insurance company, reports this based on research. Public investment in infrastructure is on the rise for the first time in a decade in the United States and Europe. In the United States, investment in roads, bridges, railways, ports, airports, electrical installations and the Internet is projected to increase to 2.3 percent of gross domestic product (GDP) by 2030. In Europe, the investment period is shorter. Investment in Germany, the eurozone’s largest economy, will rise to 1 percent of GDP by 2027 and 2.5 percent in France.
Investments will increase US GDP by 0.9 percent over the next three years. In Europe, the impact will be greater in Spain (plus 0.9 percentage points) and smaller in Germany (plus 0.35 percentage points).
An important additional effect is that investments in sustainable infrastructure finance the transition to a low-carbon economy. According to Johann Jeromes, director of risk management at Euler Hermes Penelax, investments in infrastructure related to the transition to zero-emission energy are “essential”. For example, Geromes suggests investing in additional grid capacity to meet growing electricity demand.
According to Geroms, government investment also has an important signal function. “It inspires confidence in the future and thereby stimulates private investment.” According to Euler Hermes’ research department, current infrastructure projects will attract up to $ 100 billion in US private capital annually by 2025. In Europe it is different for each country. In France it is about 50 billion euros and in Germany 10 billion euros.
However, public and private sector investment is not enough to pay for energy change. Euler Hermes estimates that the United States is less than $ 210 billion a year to achieve its goals. The annual investment gap for the four major European economies is estimated at approximately EUR 140 billion.
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