Germany Debates Sweeping Fiscal Reforms for Defense and Infrastructure
Chancellor-designate Friedrich Merz seeks to loosen constitutional debt limits to fund €500 billion in investments as geopolitical tensions reshape European priorities.
- Friedrich Merz, Germany's likely next chancellor, is pushing to exempt defense spending exceeding 1% of GDP from the 'debt brake' and establish a €500 billion infrastructure fund.
- The proposed reforms require a two-thirds parliamentary majority to amend the constitution, with the Greens' support being critical but uncertain due to disagreements over climate spending priorities.
- Merz's urgency stems from fears of U.S. disengagement under President Donald Trump and the need to bolster Europe's defense capabilities in response to Russian aggression in Ukraine.
- The outgoing parliament is debating the proposals before March 25 to avoid potential opposition from the newly elected Bundestag, which includes a larger far-right and far-left presence.
- Economists and allies abroad view the proposed fiscal expansion as Germany's largest since reunification, potentially revitalizing its economy after years of stagnation.
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