Overview

• Finance Minister Lars Klingbeil announced the imminent formation of an expert commission to propose reforms to Germany’s constitutional debt brake.
• The reform seeks to ensure stable public finances while enabling long-term investments in infrastructure, defense, and climate initiatives.
• Proposals are expected by the end of 2025, with draft legislation targeted for passage before year-end, requiring a two-thirds parliamentary majority.
• Klingbeil indicated potential collaboration with the Greens and Die Linke, despite the Union’s formal exclusion of cooperation with the Left.
• The €500 billion special fund approved in March serves as a temporary measure, underscoring the need for permanent fiscal rule adjustments.