Conservative leader Friedrich Merz has successfully convinced the Greens to support his ambitious €500 billion investment plan over ten years, removing a major obstacle to its adoption. This special fund, intended to modernize Germany and strengthen its defense, required constitutional reform, which the agreement now unlocks.
Until now, the "debt brake," enshrined in the German constitution, limited the budget deficit to 0,35% of GDP. The agreement reached between the conservatives (CDU-CSU), the Social Democrats (SPD), and the Greens provides for the exclusion of certain expenditures from the calculation, notably those related to defense, aid to Ukraine, and internal security. The aim is to circumvent the budgetary austerity that is hampering strategic investments.
In return, Friedrich Merz made several concessions to the Greens, including doubling climate funding from €50 billion to €100 billion. This commitment was decisive in securing their support.
The bill will be submitted to the Bundestag for a vote on March 18, before being examined by the Bundesrat on March 21. While the federal states led by coalitions including the liberals and the far left are expected to abstain, Merz will still need to rally the Free Citizens party to ensure the bill's final adoption.
This compromise marks a turning point in German budgetary policy and confirms Friedrich Merz's desire to break with financial orthodoxy, in a context of growing geopolitical tensions and the need to modernize infrastructure.
