The plan calls for a $54.5 billion fund for infrastructure spending.
Germany’s next prime minister, Friedrich Merz, has announced a contract that dramatically overhauls the country’s debt rules to allow 500 billion euros ($545 billion) in infrastructure investments over the next 12 years.
Mertz’s conservatives and their future Social Democrat coalition partners reached an agreement with the Greens party on Friday, waiving more than 1% of gross domestic product (GDP) on defense and security, including domestic protection, intelligence reporting agency and “assistance to countries exposed to illegal attacks.”
“Germany is back,” Merz said. The agreement added that Berlin has informed its partners and enemies of its willingness to protect itself.
The debt brake has been a hallmark of Berlin’s fiscal policy since it was introduced in 2009 by former Prime Minister Angela Merkel, limiting new borrowings to 0.35% of GDP.
Economists and investors have long urged Germany to reform its debt brakes to free up investments and support the economy that it has signed for the past two years.
Friday’s deal was reached by President Donald Trump, who has been absent from supporting Ukraine in the fight to fight off Russian invasion amid tensions between Washington and the European Union. Concerns about the future direction of US foreign policy have encouraged a call to Germany, which has long relied on the US security umbrella to quickly increase military funding amid signs that increase Russia’s aggression.
“Additional delay” for boost [defence] “It’s going to be irresponsible,” Meltz said during a congressional debate on Thursday.
“In light of the incredible security situation in Europe in every respect and the growing economic challenges of our country, broad decisions cannot be postponed anymore,” he told lawmakers.
But Friday’s deal follows days of often heated debate in which Greens members threatened to withhold their support, citing inadequate actions towards the planning environment.
Their vote was necessary to achieve a two-thirds majority in the German parliament, which was necessary to change the debt brake.
Meltz, whose conservatives first concluded in the February election, said after talks with the Greens it had been agreed that the Infrastructure Fund’s 100 billion euros ($10 billion) would be dedicated to climate protection measures.
His next government is eager to approve the spending plan before the newly elected parliament is convened at the end of March.
In the new room, German far-right alternatives and left-left parties who oppose the plan will have numbers blocking the measure.
The parties have submitted legal assignments to the expenditure plan in the Federal Constitutional Court, claiming that there is insufficient time for consultation.
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