Germany's Merz announced plans by the CDU/CSU and SPD to submit a motion to the Bundestag next week for a substantial €500 billion infrastructure fund. This initiative also seeks to revise existing constitutionally mandated borrowing limits, known as the debt brake. The goal is to enable greater investment and counteract economic contraction. With global political tensions, especially regarding the US and Ukraine, Merz stressed the need for stronger European defense measures. Proposed changes will exempt additional defense expenditures from existing fiscal constraints.
The CDU/CSU and SPD agreed to create a 500-billion-euro infrastructure fund and overhaul borrowing rules, marking a tectonic shift in Germany's spending strategy.
Merz emphasized the urgent need for Europe to reinforce its defense capabilities amid fears that the US might disengage from European security commitments.
He stated that the CDU/CSU and SPD would move to amend the constitution, exempting defense spending above 1% of GDP from the debt brake restrictions.
This proposed constitutional amendment reflects a consensus that recent borrowing rules are inadequate for addressing contemporary economic challenges.
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