Friedrich Merz’s €1tn Spending Package Approved in Germany
Friedrich Merz’s €1 trillion spending initiative has successfully passed its final step in the outgoing German parliament, as the conservative leader gears up for challenging coalition negotiations with the Social Democrats (SPD).
On Friday, the constitutional reform gained the approval of over two-thirds of the Bundesrat, the upper house that represents Germany’s 16 federal states.
The reforms, which received endorsement from the Bundestag earlier this week, ease constitutional borrowing limits to permit unlimited defense spending and establish a special €500 billion fund over 12 years aimed at modernizing the nation’s infrastructure.
This package underscores Germany’s aspiration to expedite its rearmament and may revive the Eurozone’s largest economy from prolonged stagnation. Its passage concludes a month-long effort to implement it before the current parliament’s term expires next week.
Merz, whose Christian Democratic Union (CDU) secured victory in last month’s elections, convened emergency sessions of the previous parliament to utilize the necessary supermajority from traditional parties, avoiding potential opposition from the far-right Alternative for Germany and the far-left Die Linke, which hold a minority in the newly elected Bundestag.
Despite initial setbacks, the CDU, SPD, and Greens eventually gained the two-thirds majority needed in the Bundesrat after securing support from their coalition partner, the Free Voters, in Bavaria.
Andreas Busch, a political science professor, hailed it as a significant triumph for Merz, noting his successful coalition-building under challenging circumstances. Now, economists assert that Germany’s armed forces require over €400 billion in coming years, while the reform also allows federal states to incur new debt.
To align with his coalition partners, Merz has agreed to the special infrastructure fund, while the Greens have negotiated for increased investments in green initiatives. The 69-year-old politician now shifts his focus to complex discussions with the SPD, aiming to finalize a broader coalition agreement by the end of April, prior to the Bundestag voting him in as chancellor.
