A coalition of the CDU and SPD plans to propose a constitutional amendment in the upcoming week to exempt higher defense spending from the debt brake and establish a special fund of 500 billion euros for infrastructure investments. The CDU and SPD do not have the necessary two-thirds majority in the Bundestag to pass the amendment alone and are instead seeking the support of the Greens or the FDP.
According to CDU leader Friedrich Merz, the amendment would allow the federal government to finance defense spending above one percent of the country’s GDP without being restricted by the debt brake. Merz emphasized the need for Germany to increase its defense spending in the face of growing threats and expressed confidence that the US would continue to uphold its defense commitments to Germany and Europe.
The additional defense spending would only be sustainable, Merz said, if the country’s economy returns to a stable growth path soon. To achieve this, the government would need to invest in infrastructure and a special fund of 500 billion euros over the next 10 years would be established to finance these investments. The fund would be credit-financed and would also be expected to trigger significant private investments.
The 500 billion euros would include 100 billion euros for the states, which would also be allowed to take on a small amount of debt, similar to the federal government. A more far-reaching reform of the debt brake is planned for the new Bundestag, which would require the support of the AfD or the Left to pass due to the necessary two-thirds majority.
SPD leader Lars Klingbeil emphasized the need to reform the debt brake to prevent it from becoming an obstacle to investments and announced that the SPD would work on the reform by the end of 2025. The European Union’s fiscal rules would still apply, regardless of the debt brake in the German constitution.