German lawmakers approved a significant spending plan that loosens the country’s strict debt rules to allow for increased investment in defense and infrastructure. This historic decision, led by Friedrich Merz, the prospective next chancellor, passed with a vote of 513 to 207 in the Bundestag, the lower house of parliament. The plan required a two-thirds majority (at least 489 votes) due to its amendments to Germany’s constitutional “debt brake,” which traditionally limits borrowing to 0.35% of annual GDP.
The package exempts defense and security spending exceeding 1% of GDP from these debt restrictions, covering areas like military enhancements, intelligence agencies, and aid to Ukraine. Additionally, it establishes a 500-billion-euro ($544 billion) fund, financed through borrowing, to revitalize Germany’s infrastructure over the next 12 years. This fund aims to address the country’s stagnant economy—Europe’s largest—by investing in critical areas such as transportation, energy, and housing, with 100 billion euros specifically allocated for climate-related initiatives at the insistence of the Greens party.
The approval came amidst growing concerns over the reliability of the trans-Atlantic alliance, particularly with doubts about U.S. commitment under President Donald Trump, and ongoing geopolitical tensions, including Russia’s invasion of Ukraine. The vote was strategically pushed through the outgoing parliament before the newly elected one convenes on March 25, 2025, to avoid potential opposition from parties like the far-right Alternative for Germany (AfD) and the Left Party, which hold significant seats in the new parliament and oppose aspects of the plan.
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The plan amends Germany’s constitutional “debt brake,” which caps annual borrowing at 0.35% of GDP, to exempt defense and security spending that exceeds 1% of GDP. This allows for substantial increases in military funding without triggering the usual fiscal constraints. The exemption applies not only to the armed forces (Bundeswehr) but also to intelligence agencies, civil defense, and Germany’s contributions to international security efforts, such as aid to Ukraine.
The decision is driven by concerns over the reliability of the U.S. as a NATO partner, particularly with President Donald Trump’s administration raising doubts about trans-Atlantic commitments. Germany aims to strengthen its role within NATO and the European Union’s defense framework. Russia’s ongoing war in Ukraine, now in its third year, has heightened the urgency to modernize Germany’s military capabilities and support allies in the region. While exact figures for annual defense spending weren’t specified in the initial vote, the exemption enables Germany to surpass its previous NATO commitment of 2% of GDP—a target it first met in 2024 with a special 100-billion-euro fund established after Russia’s 2022 invasion of Ukraine.
Unlike the 2022 special fund, which was a one-off measure, this plan integrates defense spending into a long-term framework. It leverages borrowing capacity freed up by the debt brake amendment, potentially drawing from the broader 500-billion-euro ($544 billion) fund established for infrastructure and climate initiatives over the next 12 years. The defense portion isn’t separately quantified in public statements, but its prioritization suggests a significant allocation, likely in the tens of billions annually, given Germany’s GDP of approximately 4 trillion euros.
The vote (513 to 207) in the Bundestag secured the necessary two-thirds majority to amend the constitution, reflecting broad support from Friedrich Merz’s Christian Democratic Union (CDU), its Bavarian sister party CSU, and coalition partners like the Social Democrats (SPD) and Greens. Opposition came from the far-right Alternative for Germany (AfD) and the Left Party, who criticized the militarization and debt increase. The outgoing parliament rushed the vote before the new session on March 25, 2025, to avoid complications from the AfD’s stronger presence in the incoming legislature.
The plan awaits approval from the Bundesrat, Germany’s upper house, representing the 16 federal states. Given the cross-party support in the Bundestag and the urgency of the security situation, passage is anticipated, though some states may negotiate adjustments. This defense spending overhaul marks a turning point for Germany, shifting from its post-World War II reluctance toward military engagement to a more assertive stance, aligning with its economic weight in Europe.