Overview

• Germany's likely next chancellor, Friedrich Merz, and coalition partners plan to create a €500 billion infrastructure fund and exempt defense spending above 1% of GDP from strict borrowing limits.
• The proposed reforms aim to strengthen Germany's military and economy, responding to concerns over U.S. disengagement from Europe and ongoing threats from Russia.
• The euro and German stock markets surged following the announcement, with defense and construction companies seeing significant gains.
• The reforms require a two-thirds majority in the Bundestag, with support from the Greens needed to pass constitutional amendments.
• Critics argue the outgoing parliament's push for these changes is controversial, while public opinion remains divided over loosening Germany's 'debt brake.'