Germany’s outgoing parliament is set to convene on Thursday to discuss the establishment of a €500 billion infrastructure investment fund and significant alterations to the country’s borrowing limits. The goal is to increase defense spending. Conservative election victor Friedrich Merz, on the brink of becoming the new chancellor, aims to finalize the funding before the new parliament convenes in less than two weeks. He seeks to avoid opposition from a potential “blocking minority” of far-right and far-left lawmakers in the incoming Bundestag.
Should Germany ease its strict fiscal rules, known as the “debt brake,” its allies have reacted positively and markets have shown optimism. Economists predict that increased public spending could help the nation recover from its recent economic slump. However, the agreement is still a long way off, as Merz’s CDU/CSU coalition and potential future coalition partner, the Social Democrats (SPD), must secure Green party support to attain the required two-thirds majority to amend the constitution.
Negotiations with the Greens have reached an impasse, with the Green Party citing serious flaws, particularly the insufficient focus on climate policies. Merz has faced accusations that he plans to use the new funds to finance projects appealing to conservative voters, and he has been asked to provide guarantees of wide-ranging reforms.
The far-right Alternative für Deutschland and the far-left Die Linke have filed complaints with the constitutional court, which may issue a ruling this week. Merz has emphasized the pressing nature of increasing defense spending, especially in light of Russia’s invasion of Ukraine and under the presidency of Donald Trump, arguing that Europe must become more self-reliant.
Economists have mixed views on Merz’s package, calling it both a “bazooka” and “an extremely risky bet.” Merz, however, considers it essential “in light of the threats to our freedom and peace on our continent.” On Thursday, alternative defense funding proposals from the Greens and the pro-business FDP will be presented, setting the stage for a contentious and vibrant parliamentary session.
The second and third readings of the government’s plans will occur next Tuesday. Until then, Merz is expected to continue negotiations with the Greens, according to his party officials.
Source: https://www.theguardian.com/world/2025/mar/13/german-parliament-to-debate-radical-borrowing-rule-changes-to-boost-defence
