German Parliament Passes Historic Debt Reform for Defense Spree
Germany’s outgoing parliament approved legislation on Tuesday to amend strict fiscal rules, increase government borrowing, and fund a massive surge in defense and infrastructure spending.
The package allows the government to borrow beyond normal debt limits for defense and security spending as well as assistance to Ukraine, worth more than 1 percent of GDP.
Up to 100 billion euros ($109 billion), or 20 percent of the infrastructure fund, has been pledged for climate policies.
Parliament voted 513-207 in its final meeting to approve the plans.
The legislation still must go to the Bundesrat, the upper house, which represents the governments of Germany’s 16 federal states. Lawmakers from the Christian Democratic Union (CDU) and the Social Democrats (SPD) said they expect the upper house to pass it.
CDU leader and Chancellor-designate Friedrich Merz, who won last month’s federal election, had been rallying support for the half trillion-euro spending plan aimed at modernizing the military and stimulating economic growth.
After the vote, the American credit rating agency Fitch Ratings said it expects 900 billion to 1 trillion euros in additional spending from Germany over the next decade.
“We have for at least a decade felt a false sense of security,” Merz said before the March 18 vote. “The decision we are taking today on defence readiness … can be nothing less than the first major step towards a new European defence community, which also includes countries that are not members of the European Union.”
MPs from the right-wing Alternative for Germany (AfD), the pro-business Free Democrats, the Left Party, and the Sahra Wagenknecht Alliance filed last-minute complaints with the constitutional court, but were rejected on Monday.
Merz’s conservatives and the Social Democrats (SPD), who are in talks to form a coalition government after last month’s elections, are jointly pushing the measures.
The CDU, the SPD, and the Greens secured the two-thirds majority needed to pass constitutional amendments. They aimed to pass the legislation through the current parliament, as it could be blocked by right- and left-wing lawmakers in the new Bundestag, which convenes on March 25.
To secure the necessary two-thirds majority, they had to incorporate last-minute demands from the Greens into their proposal.
The environmentalist party said it would support loosening debt rules only if there was genuine backing for climate policies.
Regarding energy and the climate, the CDU said, “We will put an end to the ideologically driven policies of the previous government.”
Ralph Schoellhammer, political theorist and head of the Center for Applied History at Mathias Corvinus Collegium, told The Epoch Times: “At the moment, I would say that the Germans have gotten used to nothing ever changing, so I believe that many are not aware of what this debt spree could mean. This will have to trickle through, but once it does, I would get ready for pre-revolutionary conditions in Germany.”
Debt Brake
About 60 percent of Germans are in favor of keeping the debt brake.
The move to create an infrastructure fund and overhaul borrowing rules marks a major break from Merkel-era fiscal rectitude.
This would be significantly higher than the 63 percent ratio at the end of 2024 but still below the previous high of 80 percent in 2010 following the global financial crisis.
