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13-Mar-2025
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Germany: Merz, outgoing parliament discuss €500 billion fund for defense and infrastructure

AUTHOR:M.J. GDNUS

German lawmakers in the outgoing parliament will meet today to discuss a €500 billion fund for infrastructure and defense, as well as changes to borrowing rules. Friedrich Merz, the winner of last month’s election, plans to secure the funds before the new parliament holds its first session on March 25, fearing opposition from right-wing and left-wing lawmakers.

The potential spending boost has rattled markets, sending the euro to a five-month high against the dollar. However, a deal has not yet been finalized, as Merz’s conservatives (CDU) and Social Democrats (SPD) must win the support of the Greens to achieve the two-thirds majority needed to change the constitution.

The proposal could also face challenges from Germany’s constitutional court, which could rule on complaints from right-wing and left-wing parties as early as Thursday. Merz, seen as a decisive leader, has argued that strengthening defense is crucial, especially with the possible withdrawal of the United States under President Donald Trump.

The Bundestag will hold a first reading of the proposal on Thursday, with second and third readings scheduled for next Tuesday. Analysts expect the reforms to pass but warn of a difficult process, calling it the biggest fiscal expansion since unification.

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