German parties agree on massive defense, infrastructure funding

BERLIN

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

Conservative leader Friedrich Merz announced after Tuesday's coalition talks with Social Democrats that they have agreed on taking swift action to strengthen the country's defense capabilities amid escalating geopolitical threats and changes in US foreign policy.

“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% 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. He noted that this proposal will also be brought to the parliament’s agenda next week.

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.

In the new Bundestag, the parties do not have the necessary support, and the initiative could be blocked by the Left Party and the far-right AfD party, which gained a significant number of seats in the election.

Conservative leader Friedrich Merz's CDU/CSU alliance won 28.5% of the vote in the Feb. 23 general elections, establishing a clear lead over other parties but failing to achieve an absolute parliamentary majority. The Social Democrats, despite recording their lowest historical result at 16.4%, have positioned themselves as a crucial coalition partner. Together, the parties would command 328 seats in the Bundestag, comfortably surpassing the 316-seat requirement for a governing majority.

The Christian Democrats and Social Democrats are expected to continue their preliminary coalition talks on Thursday and Friday. Merz has repeatedly said that he wants to build the coalition government before the Easter holiday (April 20–21), citing pressing domestic economic challenges and escalating international security concerns that require immediate governmental action.