Digitalisation in the National Budget

A team of researchers from ZEW’s Research Units “Digital Economy” and “Corporate Taxation and Public Finance” for the first time systematically examined the financial resources earmarked for digitalisation in the federal budget. For the budget years 2019, 2021, 2023 and 2024, planned expenditure is more than 60 billion euros: Depending on the definition used, digitalisation expenditure ranges between 62.2 and 67.1 billion euros. The calculation is based on an evaluation of more than 20,000 budget items. However, the lack of a systematic structure and the insufficient level of detail in the explanations of these items pose considerable challenges.

Between 2019 and 2023, planned expenditure on digitalisation increased significantly or even more than doubled. One major driver was the COVID-19 pandemic, which triggered additional investment in digital infrastructure and administrative processes. The analysis highlights several key developments:

Growing importance of digitalisation: Federal digitalisation spending has more than doubled since 2019 and has gained significantly more importance overall.

Focus on administration: The largest share of expenditure is allocated to the digitalisation of public administration, followed by digital infrastructure and research and innovation.

Efficacy is crucial: A successful digitalisation policy depends not only on the amount of funds allocated but also on their effective and efficient use.

Lack of transparency: So far, digital expenditure has not been systematically tracked in the federal budget, which complicates detailed analysis.
 
The findings of the study, which was conducted for the think tank Agora Digitale Transformation, show that a systematic presentation of a ‘digital budget’ could help to make digitalisation expenditure more visible and thus anchor digitalisation more firmly in the budget in the long term. At the same time, it is clear that, alongside the amount of funding, its targeted use is crucial to the success of the digital transformation.