Germany’s parliament has approved Friedrich Merz’s plans to inject up to €1tn into the country’s military and infrastructure, in a move that could revive Europe’s largest economy and boost the EU’s rearmament efforts.
In an emergency session of the outgoing Bundestag on Tuesday, the chancellor-in-waiting won the support of 513 lawmakers, more than the two-thirds majority required for the constitutional changes.
Merz’s push to loosen Germany’s strict borrowing limit and end decades of fiscal orthodoxy and under-investment in infrastructure, will also need to be backed by the country’s upper house in a vote on Friday.
The Christian Democrat is seeking to increase defence spending and create a €500bn, 12-year fund to modernise hospitals, schools, roads and energy networks.
Economists have estimated that the country’s armed forces need more than €400bn in coming years, funding likely to be unleashed by Merz’s reform, which will also loosen borrowing rules for the country’s 16 federal states.
After winning elections last month, Merz took the unusual step of recalling the lame duck Bundestag, whose mandate ends on March 25, to rush through the reform.
Mainstream parties will no longer hold a supermajority in the newly elected parliament, with the far-right Alternative for Germany and far-left Die Linke together holding more than a third of the seats.
The two parties would have almost certainly blocked Merz’s proposed changes.
The key move sought by the incoming chancellor is to exempt most defence spending from the “debt brake” enshrined in the constitution in 2009.
The rule limits the federal government’s structural deficit to 0.35 per cent of GDP, adjusted for the economic cycle, and in effect prohibits the 16 federal states from running any deficits at all.
This is a developing story
