A provision would exempt defence spending above 1% of GDP from debt brake rules, enabling Germany to increase military spending without limit.
CDU leader Friedrich Merz has revealed plans for a new €500 billion special fund aimed at boosting infrastructure and defence spending.
Just over a week after his victory in the federal elections, Merz announced that his Christian Democratic Union (CDU), together with its Bavarian sister party (CSU) and likely coalition partner, the Social Democrats (SPD), will present a joint bill in parliament next week to ease the country’s debt brake.
“I want to say that very clearly in view of the threats to our freedom and peace on our continent, our defence must now apply ‘Whatever it takes’,” said Merz, speaking alongside SPD and CSU party leaders at a press conference in Berlin on Tuesday.
“The additional spending on defence can only be coped with if our economy returns to stable growth within a very short period of time . . . This requires rapid and sustainable investments in our infrastructure,” he added.
Amendment to ‘Basic Law’
The bills need a two-thirds majority in parliament to pass, meaning Merz must reconvene the outgoing Bundestag, elected in 2021, and gain the backing of the Greens.
It marks a significant shift from Germany’s historically conservative approach to public borrowing. In 2009, Berlin enshrined the debt brake in its constitution, which restricts government borrowing and sets the structural deficit at a maximum of 0.35% of GDP.
Although Merz did not indicate such a move during the election campaign, the CDU/CSU is now defending the decision in light of recent global political events, including the tense clash between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy in Washington.
“Germany and Europe must quickly strengthen their defence capabilities. The CDU, CSU and SPD will table a motion to amend the Basic Law so that defence spending above 1% of GDP is exempt from the debt brake,” Merz stated at the press conference.
SPD leader Lars Klingbeil emphasised that investments would not only be made in the German armed forces but also in a substantial funding programme for schools, day care centres, and infrastructure.
“This country has been running on empty in many areas, but that is now a thing of the past,” Klingbeil said.
Response to the deal announcement
The Greens’ Parliamentary group leader, Katharina Dröge, has criticised Merz for failing to engage in dialogue with the her party before making the announcement, noting that the CDU/CSU could discussed their plans with the Greens in advance to secure the majority needed to pass the special fund in the newly elected Bundestag.
Merz has also faced some criticism for failing to outline his fiscal plans during his federal election campaign.
“Defence is largely exempt from the debt brake, with an additional €500 billion allocated for special infrastructure projects, plus further debt in state budgets! This is a matter of state policy,” says Robin Alexander, the deputy editor-in-chief of German newspaper WELT.
“However, it’s also true that this aligns more with what Scholz and Habeck proposed during the election campaign than with the approach that Merz campaigned on during the Bundestag election,” he adds.
Markus Feldenkirchen, a journalist for German newspaper Spiegel, made similar comments on the plan stating “the agreement between the CDU/CSU and SPD on the future financing of politics is responsible. What the future chancellor’s party proposed about financing during the election campaign was completely irresponsible. It was clearly a deliberate deception.”
