Germany’s conservative leader, Friedrich Merz, has successfully negotiated a substantial financial package to overhaul the country’s defence and infrastructure. The deal, secured after 10 hours of talks with the Greens, comes ahead of a crucial parliamentary vote on Tuesday.
Merz described the agreement as a “clear message” to Germany’s allies, declaring, “Germany is back.” He emphasised that the funding plan underscores the country’s commitment to defending freedom and peace in Europe, especially as concerns grow over US support under President Donald Trump.
Merz, who is expected to become Germany’s next chancellor, aims to push the reforms through the outgoing parliament before newly elected lawmakers take their seats on 25 March. With support from the Social Democrats and Greens, he is likely to secure the required two-thirds majority, despite opposition from the far-right Alternative for Germany (AfD) and the Left party.
Key Components of the Deal
Defence Spending: A significant increase in military, civil protection, and intelligence funding, with spending above 1% of GDP exempt from debt restrictions.
Infrastructure Investment: A €500 billion fund for infrastructure improvements over the next decade, including €100 billion allocated for climate protection initiatives.
State Borrowing: Germany’s 16 states will be permitted to borrow up to 0.35% of GDP above the constitutional debt limit.
Ukraine Aid: The agreement allows Germany to provide financial assistance to nations “attacked in violation of international law,” enabling outgoing Chancellor Olaf Scholz to release €3 billion in aid to Ukraine next week.
The reform package follows years of debate over Germany’s strict debt rules, introduced by Angela Merkel’s government in 2009. These restrictions limited borrowing to 0.35% of GDP, contributing to chronic underinvestment in infrastructure and defence.
Social Democrat chairman Lars Klingbeil hailed the agreement as a “historical signal” that would strengthen Germany’s role in Europe. The Greens, though not part of Merz’s coalition, welcomed the climate funding boost. Outgoing Foreign Minister Annalena Baerbock praised the deal, saying it would make Germany safer and reinforce its support for Ukraine.
However, AfD co-leader Alice Weidel strongly criticised the package, calling it a “financial coup” that burdens future generations with excessive debt.
With the constitutional court rejecting legal challenges from AfD and the Left, the parliamentary vote will proceed as planned. If approved, the deal could reshape Germany’s economic and security policies for the next decade.
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