Friedrich Merz, Germany's chancellor-in-waiting, has secured the support of the Green party for his radical plan to increase defence and infrastructure spending, following marathon overnight talks. The deal, which relaxes Germany's strict debt brake, is seen as a major step towards Merz's goal of bolstering European security independent of Washington.
The conservative CDU/CSU bloc, which won last month's election, and the Social Democrats (SPD) proposed a €500bn (£420bn) special fund for infrastructure, alongside exempting defence spending exceeding 1% of GDP from the debt brake. The Greens' backing gives Merz the two-thirds majority needed for a constitutional change, avoiding a potential blocking minority from far-right and far-left MPs in the new Bundestag.
Merz made concessions to the Greens, dedicating up to €50bn of the special fund to climate protection and expanding defence spending to include civil defence and intelligence. The Greens had previously criticised the proposals as vague and lacking climate commitments. The outgoing Bundestag is set to vote on the legislation on Tuesday, followed by approval in the Bundesrat.
Markets reacted positively, with the euro, bond yields, and equities rising. Analysts said the deal signals Germany's decisiveness on defence amid global uncertainty. SPD leader Lars Klingbeil called it “a powerful boost for Germany,” while Merz stated, “Germany is back.” The new parliament convenes on 25 March.
