CDU leader Friedrich Merz (center) announced the agreement on debt reform by saying “Germany is back.” – Image: Michael Kappeler/dpa/picture alliance
The CDU/CSU bloc and the SPD have reached an agreement with the Greens on a massive increase in government borrowing.
The conservative CDU/CSU bloc of German election winner Friedrich Merz and the Social Democrats (SPD) have agreed in principle with the Greens on plans for a massive increase in state borrowing ahead of a parliamentary vote next week.
The debt reform plan, put forward jointly by the conservatives and the SPD, would exempt defense spending from the country’s constitutionally enshrined debt brake and create a special €500 billion ($545 billion) fund for infrastructure investment.
The news was first reported by the Reuters news agency, citing a source close to the negotiations. One of the sources said the compromise includes the allocation of €100 billion for the climate and economic transformation fund.
What did German politicians say?
“Germany is back,” said Merz, announcing the agreement on debt reform.
“It is a clear message to our partners and friends, but also to our opponents, to the enemies of our freedom: we are capable of defending ourselves and we are now fully prepared to defend ourselves,” he said.
Merz also said he expects the country to release €3 billion ($3.27 billion) in military aid to Ukraine once the upper house passes the debt reform.
“There will be no shortage of financial resources to defend freedom and peace on our continent,” Merz stressed. “Germany is making its major contribution to the defense of freedom and peace in Europe.”
Meanwhile, Social Democrat co-leader Lars Klingbeil said a major government borrowing and investment push was a “powerful boost” for Europe’s largest economy.
“We have laid the foundation for Germany to get back on its feet and protect itself,” Klingbeil said after his SPD agreed with conservatives and Greens on the historic debt package.
Merz wants outgoing Bundestag to pass debt reform
The Greens had initially refused to back the plan, which needed their support to reach the two-thirds majority required for a constitutional amendment in the Bundestag, Germany’s lower house of parliament.
Merz’s goal is to secure the funds before the new Bundestag convenes on March 25, where they risk being blocked by an expanded contingent of far-right and far-left lawmakers.
The outgoing Bundestag could pass the package on Tuesday. It would then have to be approved by a two-thirds majority in the upper house, the Bundesrat. (DW/NAN 15-03-25)
