Germany’s parliament has approved Friedrich Merz’s plans to inject up to €1tn into the country’s military and infrastructure, in a move that could revive Europe’s largest economy and boost the EU’s rearmament efforts.
In an emergency session of the outgoing Bundestag on Tuesday, the chancellor-in-waiting won the support of 513 lawmakers, more than the two-thirds majority required for the constitutional changes.
Merz’s push to loosen Germany’s strict borrowing limit and end decades of fiscal orthodoxy and under-investment in infrastructure, will also need to be backed by the country’s upper house in a vote on Friday.
The Christian Democrat and his likely coalition partners the Social Democrats (SPD), are seeking to allow unlimited borrowing for defence spending and create a €500bn, 12-year fund to modernise hospitals, schools, roads and energy networks.
Economists have estimated the country’s armed forces need more than €400bn in the coming years, funding likely to be unleashed by Merz’s reform, which will also loosen borrowing rules for the country’s 16 federal states.
“This decision we are making today on our country’s defence readiness, is no less than the first major step towards a new European defence community,” Merz told MPs before the vote.
“We are combining the restoration of our defence capacity with the modernisation of our infrastructure,” he added.
After winning elections last month, Merz took the unusual step of calling for an emergency session of the old Bundestag, whose term ends on March 25, to rush through the reform. The new parliament, elected last month, no longer has a supermajority that would have backed the measures.
Merz, who had previously refused to change the country’s constitutional borrowing limit, justified his sudden U-turn by the rapidly deteriorating transatlantic relationship and the growing threat from Russia.
Within hours of winning the elections last month, Merz declared Germany had to end a decades-long reliance on Washington, saying US President Donald Trump was “largely indifferent” to Europe’s fate.
“It must be an absolute priority to strengthen Europe as quickly as possible so that, step by step, we actually achieve independence from the US,” he said then.
But in the wake of federal elections he realised he had a problem: the far-right Alternative for Germany and far-left Die Linke together hold more than a third of the seats in the new Bundestag and would have voted against Merz’s reform.
The incoming chancellor’s main push is to exempt most defence spending from the “debt brake” enshrined in the constitution in 2009.
The rule limits the federal government’s structural deficit to 0.35 per cent of GDP, adjusted for the economic cycle, and in effect prohibits the 16 federal states from running any deficits at all.
The constitutional changes should also secure a two-thirds majority in the Bundesrat, the chamber that represents the country’s states, after Bavaria indicated it would vote in favour.
During the four-hour long debate on Tuesday, critics accused Merz of burdening future generations with a massive debt load. AfD co-leader Tino Chrupalla invoked former CDU finance minister Wolfgang Schäuble, mentor of Merz and champion of a balanced budget.
Chrupalla said: “Your former finance minister, Wolfgang Schäuble, advocated investing only the money that was in the budget. And what do you actually stand for, Mr Merz?”
Boris Pistorius, the current SPD defence minister, argued Russia, which had become “Europe’s greatest security threat”, justified the ambitious reform to keep modernising the Bundeswehr.
“We are not selling the future, as you would have us believe in your religious zeal for the debt brake. We are securing the future,” Pistorius said. “The threat situation is more pressing than the cash situation.”
The Greens, which agreed to back Merz’s reforms after some bargaining last week, vowed to keep the future chancellor in check to ensure responsible spending.
“We will make sure that this money is now really invested sensibly for a functioning infrastructure, for our security, for Ukraine, for climate protection,” said Green co-leader Franziska Brantner.
She invoked postwar CDU chancellor Konrad Adenauer who signed the Rome Treaty that founded the European Economic Community in 1957.
“Mr Merz, this could be an Adenauer moment for you. You could seize the opportunity to write a new chapter in European integration,” she said. “Germany is a great country. Make something out of it.”
