Germany Plans Big Spending Boost to Help Economy and Security
Germany’s lower house of parliament is voting on Tuesday on a huge plan to borrow more money. This could help Germany’s economy grow and also support other countries in Europe. However, Germany is still dealing with trade issues with the U.S., its biggest trading partner.
According to Reuters, the plan includes creating a 500-billion-euro fund ($546 billion) to improve infrastructure like roads and bridges. It also aims to change strict borrowing rules in the constitution to allow more spending on security and defense.
This is a big shift from Germany’s usual careful spending habits, which some blame for slowing the economy in recent years.
The plan has already made European markets more positive, with Germany’s stock index rising 1% on Tuesday. Leaders from the conservative, Social Democrat (SPD), and Green parties are confident they can get the two-thirds majority needed to pass the law.
Conservative leader Friedrich Merz, who is likely to become Germany’s next Chancellor, said this decision is a major step toward stronger European defense. European countries, including Germany, feel pressured to improve their defenses due to Russia’s actions and changes in U.S. policies under former President Donald Trump.
If the law passes the lower house, it still needs approval from the upper house, which represents Germany’s 16 states. A key hurdle was cleared on Monday when the Bavarian Free Voters agreed to support the plan.
This plan would ease Germany’s “debt brake,” a rule introduced after the 2008 financial crisis to limit borrowing. Critics say this rule has held back Germany’s economy. However, some accuse Merz of breaking campaign promises by suddenly supporting more spending after winning the election.
Economists warn that more reforms, like cutting bureaucracy, are needed for long-term growth. Merz admitted this, saying the plan is just the first step. He also hinted that forming a coalition government with the SPD will be challenging.
In short, Germany is taking a historic step to boost its economy and security, but it faces challenges ahead. Credit to Reuters for providing detailed insights on this developing story.
($1 = 0.9157 euros)
Credit: Reuters
https://www.reuters.com/world/europe/german-parliament-vote-historic-spending-surge-2025-03-18