Germany Proposes €500 Billion Fund and Defense Spending Overhaul

Incoming coalition seeks to amend debt rules to modernize military and boost Europe's largest economy.

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.'