The Bundestag, Germany's federal parliament, took a significant step on Tuesday by approving a measure that exempts defence spending from the country's stringent debt regulations. A two-thirds majority of parliamentarians supported the vote, with 513 in favor and 207 against. This historic decision permits the German government to bypass the debt brake law, which caps federal borrowing at 0.35% of the nation's GDP. The exemption will enable Chancellor Olaf Scholz to disburse €3 billion in aid to Ukraine as early as next week, amid ongoing tensions resulting from Russia's invasion.
The new legislation outlines that spending on defence and security, as well as aid for states attacked in violation of international law, will not be constrained by the debt brake. This move is seen as a crucial development for Europe, reflecting Germany's shift from its traditionally cautious stance on debt. Additionally, the law establishes a €500 billion ($547 billion; £420 billion) infrastructure fund to bolster the country's defence capabilities.
Friedrich Merz, leader of the Christian Democratic Union (CDU), proposed this measure promptly following his party's victory in last month's general election. By advancing the changes through the outgoing parliament, Merz capitalized on favorable vote arithmetic before the new session begins on March 25.
"The decision we are taking today… can be nothing less than the first major step towards a new European defence community," Merz stated during the session, emphasizing the broader implications for European security.
Despite this significant parliamentary approval, the Bundesrat, Germany's upper house of parliament, still needs to endorse the measure by a two-thirds majority for it to become law officially. The exemption represents a substantial policy shift for Germany, which has historically maintained a fiscal policy of low borrowing.
The decision arrives at a critical moment for Europe as it grapples with shifting defence dynamics. The uncertainty surrounding the United States' commitment to NATO under former President Donald Trump's administration further underscores the importance of bolstered European defence mechanisms.