Germany plans to rewrite debt rules to boost defense spending
Europe’s largest economy is set to take a significant step in enhancing its defense capabilities, as Germany’s Chancellor-in-waiting, Friedrich Merz, unveiled a plan to partially exempt defense spending from the country’s constitutional fiscal constraints.
“In view of the threats to our freedom and peace on our continent,” Merz said Tuesday evening in Berlin, the motto “whatever it takes” must now apply to the country’s defense, News.Az reports citing foreign media.
The plan arrives as European leaders grow increasingly alarmed by the posture of the Donald Trump administration in the U.S. toward NATO and Ukraine.
“The political developments in Europe and the world are evolving faster than we anticipated just a week ago,” Merz said. “Germany and Europe must now undertake extraordinary efforts to ensure our defense capabilities.”
Merz proposed that defense spending above 1 percent of gross domestic product be exempted from the restrictions of Germany’s constitutional debt brake, which limits the structural budget deficit to 0.35 percent of gross domestic product, except in emergencies.
Merz announced the deal to unlock defense spending alongside the leaders of the Social Democratic Party (SPD), with whom his conservatives are currently in talks to form a governing coalition.
The conservative and SPD leaders also announced a proposed €500 billion special fund to finance infrastructure projects outside of normal budgetary spending over the next decade — a plan that seems aimed at left-leaning lawmakers who otherwise might oppose loosening debt rules to enable defense spending alone.
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