German parties agree on massive defense, infrastructure funding

BERLIN

German Christian Democrats and Social Democrats agreed on a plan on March 4 to boost defense procurements and infrastructure investments by reforming the constitutional debt brake and establishing a special fund.

Conservative leader Friedrich Merz announced after coalition talks with Social Democrats that they have agreed on taking swift action to strengthen the country's defense.

“In view of the increasing threat situation, we are aware that Europe and Germany must now make great efforts very quickly to strengthen the defense capabilities of our country and the European continent,” Merz said.

“I want to make it absolutely clear that given the current threats to our freedom and peace on our continent, we must apply a 'whatever it takes' approach to our national defense,” he stressed.

Merz said that to create massive funding for defense spending, the Christian Democrats and Social Democrats would submit a motion to parliament next week to reform the constitutional debt brake, which currently limits government borrowing.

He said that with this amendment, an amount corresponding to over one percent of Germany's GDP would be exempted from the restrictions of the debt brake, which could be utilized for necessary and urgent defense spending.

Germany has strict fiscal discipline rules, and the constitutionally mandated “debt brake” restricts government borrowing to a maximum of 0.35 percent of the GDP during normal economic conditions.

Merz also announced that the parties have agreed to create a €500 billion ($530 billion) special fund to enhance Germany's economic competitiveness and finance necessary infrastructure investments.

The Christian Democrats and Social Democrats need to pass the proposals before the current parliament dissolves on March 25, as they would require a two-thirds majority in parliament.