(ANSA-AFP) - FRANKFURT, MAR 17 - Germany's plans to spend hundred of billions of euros on defence and infrastructure could be inflationary, a leading think tank warned Monday, urging the next government to also pursue pro-growth reforms. Spending large sums of borrowed money without making Germany a better place to do business could backfire, economists from the Ifo institute told a press conference. "If we don't raise the productive capacity of the economy, i.e. work more, that will only lead to inflation," said Clemens Fuest, head of the Munich-based institute. High energy prices had led some companies to relocate production abroad, Fuest said, adding that "I don't believe that they will now go back on their decision." As a result, he said, "productive capacity is lower" in Europe's biggest economy. Germany's likely next chancellor, Friedrich Merz, proposes spending 500 billion euros ($545 billion) on infrastructure in an effort to boost growth. Of this, 100 billion euros are earmarked for a climate and economic transformation fund, in a concession made last week to the environmentalist Greens to secure their support. Many economists have greeted the plans, due to be voted on in parliament on Tuesday, as a useful way for the German economy to get back on its feet after years of low or no growth. (ANSA-AFP).