Germany's upper house of parliament approved a significant reform to the nation's borrowing rules on Friday. Specifically, this reform establishes a powerful 500-billion-euro fund—approximately $542 billion. One-third of the money is intended to improve Germany’s aging infrastructure and strengthen Europe’s largest economy. The outgoing parliament managed to pass the legislation against all odds. This success came from a rare but very fruitful coalition between the conservative CDU/CSU party and the SPD party.
Yet the reform was working against a narrow timetable that Chancellor-in-waiting Friedrich Merz vigorously defended. Passing the legislation before the first meeting of the new Bundestag on March 25 is essential. This urgency is due to the likely challenges it may face from far-right and far-left lawmakers when the new session reconvenes. We used an expedited process, which drove the fringe opposition parties batty. They expressed their concern about moving so quickly.
The reform received overwhelming two-thirds majority support in Germany’s upper house of parliament, which represents the country’s 16 states. The bill was passed by the lower house, the Bundestag, on Tuesday. This ambitious vote was a welcome follow-up to that successful passage. The joint work between the conservative coalition and the SPD party was critical in guiding the legislation through both houses.
This legislative action seeks to pump badly-needed dollars into Germany’s infrastructure, placing it in strong position for future economic renewal. The federal government is clearly committed to improving infrastructure. The establishment of this half-trillion-euro fund is major evidence of this commitment to accelerate and stimulate economic growth.