Germany is set to embark on an ambitious financial plan aimed at revitalizing its defence and infrastructure, as the country's conservative leader, Friedrich Merz, secures a historic spending deal. This package, agreed by the Christian Democrats, the Social Democrats, and the Greens, promises a significant increase in investment across several key areas, including defence, civil protection, and intelligence. It marks a critical move to bolster Germany's position and influence in Europe.
The comprehensive plan includes a special €500 billion (£420 billion) infrastructure fund designed for additional investments over the next decade. Of this fund, €100 billion will be specifically allocated to climate-protection initiatives. The infrastructure fund is also set to support a defence package aimed at enhancing Germany's safety and sending a clear signal of solidarity to Ukraine, Europe, and the global community.
To finance these initiatives, Germany's 16 states will have the ability to borrow up to 0.35% of their GDP above the current debt limit. This spending, which will exceed 1% of the nation's GDP, is exempt from existing debt restrictions. However, to implement these changes, a two-thirds majority is required under Germany's constitutional framework.
Merz is pushing to pass these debt and spending reforms in the outgoing parliament before newly elected MPs take their seats in the Bundestag on March 25. This urgency underscores the importance Merz places on these reforms as he looks forward to leading a government alongside the Social Democrats in the coming weeks. Although the Greens were part of the previous government, they will not join Merz's coalition.
Alice Weidel expressed her perspective on this significant financial manoeuvre:
"This is nothing less than a financial coup."
The package is viewed as a strategic effort for Germany to fortify its role within Europe and convey a strong message to its allies that "Germany is back." By focusing on both defence and infrastructure, the plan aims to ensure that Germany remains a pivotal force on the European stage.