German parliament to vote on historic spending surge

 

The conservatives and Social Democrats (SPD), who are in talks to form a centrist coalition after last month's election, want to create a 500-billion-euro ($546.05 billion) fund for infrastructure and to ease constitutionally enshrined borrowing rules to allow higher spending on security.

 

The plans, if implemented, would upend decades of fiscal conservatism in Germany and have lifted euro zone yields and the euro currency over the past week.

 

The leaders of the conservatives and SPD, as well as the Greens, said on Monday they were confident they could reach the threshold required to pass the legislation to change the Constitution for the fiscal sea change.

 

"I am confident we will achieve a two-thirds majority," said Friedrich Merz, leader of the conservative Christian Democrats who, together with their Bavarian sister party, won the election.

 

Fewer than a handful of conservative lawmakers were against the plans, said Merz, the likely next chancellor.

 

SPD and Greens leaders also said they expected few lawmakers to reject them. The three parties can together spare around 30 votes and still pass the legislation.

 

A vote is expected around midday after a morning debate.

 

Should the legislation pass the Bundestag lower house of parliament, it still has to go to the Bundesrat upper house, which represents the governments of the 16 states that make up Germany.

 

The main hurdle to passage there appeared to fall on Monday when the Bavarian Free Voters agreed to back the plans.