The German Bundesrat, the upper house of parliament, on Friday gave its final approval to a significant package of measures proposed by the prospective next government, AP News reported.
The plans include loosening strict debt rules to enable higher defence spending and establishing a massive infrastructure fund aimed at revitalising Europe’s largest economy.
The Bundesrat, which represents Germany’s 16 state governments, approved the proposal with the required two-thirds majority. This follows Tuesday’s endorsement by the Bundestag, the lower house of parliament.
The measures were put forward by Friedrich Merz, the likely next chancellor and leader of the conservative Union bloc, who won last month’s federal election. Merz and his prospective coalition partners argue that recent global developments have underscored the urgent need to bolster Germany’s long-underfunded military. Growing doubts about the United States’ commitment to the trans-Atlantic alliance have further heightened the sense of urgency.
The package required a two-thirds majority in both houses of parliament because it involves amendments to Germany’s stringent self-imposed borrowing rules, known as the “debt brake.” Enshrined in the constitution, the debt brake limits new borrowing to just 0.35% of annual GDP.
Merz’s good start
To secure the necessary support, Merz’s Union bloc had to negotiate with the environmentalist Greens, whose votes were crucial for passing the measures.
The package exempts defence and security spending—including funding for intelligence agencies and assistance to Ukraine—from the debt brake, allowing it to exceed 1% of GDP. Additionally, it establishes a €500 billion fund, financed through borrowing, to modernise Germany’s ageing infrastructure over the next 12 years and stimulate growth in the stagnant economy.
At the insistence of the Greens, €100 billion of the investment fund will be allocated to climate-related projects. The package also grants state governments greater flexibility to borrow money for their own initiatives.
The parties involved in negotiating the deal control 41 of the 69 votes in the Bundesrat. A further 12 votes from states governed by coalitions that include other parties provided the necessary majority. Four states with governments opposed to the plans chose to abstain from the vote.
Friday’s approval marks a successful first test for Merz as he prepares to take office. However, he still faces the considerable challenge of forming a coalition government between his Union bloc and the Social Democrats (SPD) of outgoing Chancellor Olaf Scholz.
