Berlin (Brussels Morning Newspaper) – Germany’s Bundestag, the lower house of parliament is set to vote on March 18, 2025, on a significant increase in borrowing that could increase Europe’s largest economy and promote growth across the region.
German conservatives and Social Democrats (SPD), negotiating to form a centrist coalition after last month’s election, intend to establish a 500-billion-euro fund for infrastructure and to reduce constitutionally enshrined borrowing authorities to permit higher spending on security.
According to the report, the plans, if enforced, would end decades of fiscal conservatism in Germany and have raised euro zone yields and the euro currency over the past week.
Will the Bundestag approve the 500-billion-euro fund?
The leaders of the SPD and Conservatives, as well as the Greens, stated they were sure they could reach the threshold needed to pass the legislation to alter the Constitution for the fiscal sea change.
“I am confident we will achieve a two-thirds majority,”
Said Friedrich Merz, boss of the conservative Christian Democrats.
A small number of conservative lawmakers were opposed to the plans, said Merz. SPD and Greens leaders also stated they expected few lawmakers to veto them. By combining their votes, the three parties can still pass the legislation.
What challenges could delay Germany’s constitutional budget changes?
Analysts say the major hurdle to passage there appeared to fall when the Bavarian Free Voters arranged to back the plans. The conservatives and SPD intend to pass the legislation through the outgoing parliament for worry it could be intercepted by an enlarged delegation of far-right and far-left lawmakers in the next Bundestag beginning March 25.
Merz has explained the quick timetable with recent changes in U.S. policy under President Donald Trump, cautioning that a hostile Russia and an unpredictable U.S. could quit the continent.
Critics, including within his group, blame Merz for “voter fraud” for pledging not to open the spending taps during the campaign only to inform the shift in fiscal policy just days after succeeding.
Economists warn further reforms are required, for example, to shorten bureaucracy, and to ensure sustainable expansion in an economy that has contracted for two successive years. Merz recognised the warning, hinting at complex coalition talks with the SPD.
