In a significant political victory for Friedrich Merz, leader of the Christian Democratic Union (CDU) and a potential candidate for Germany’s next chancellor, the Bundestag passed a bill to suspend the country’s constitutionally enshrined "debt brake." The measure, which required a two-thirds majority, garnered 513 votes in favor, surpassing the 489 needed, with 207 votes against and no abstentions.
The bill now moves to the Bundesrat, Germany’s upper house representing the federal states, where it will also require a two-thirds majority to become law. The proposal, backed by Merz’s conservatives and the Social Democrats (SPD), paves the way for a €500 billion fund and a temporary relaxation of Germany’s strict debt rules.
A Response to Geopolitical Shifts
Merz framed the package as a necessary response to the evolving security landscape, particularly in light of Russia’s actions in Europe. Addressing lawmakers, he cited “Putin’s war of aggression against Europe” as the primary motivation, highlighting a range of threats, including attacks on critical infrastructure, arson, espionage, and disinformation campaigns. He also pointed to broader efforts to “divide and marginalize the European Union.”
Acknowledging concerns over the potential burden of increased debt, Merz argued that Germany must adapt to a new era. “We understand the worries, we understand the criticism,” he said, but emphasized that the country had operated under a “false sense of security” for at least a decade. He described the current moment as a “paradigm shift,” requiring Germany to rebuild its defense capabilities, “in part from scratch.”
Experts estimate that Germany’s armed forces-Bundeswehr- will need more than €400 billion in the coming years to address chronic underfunding. Merz expedited the proposal ahead of the new parliament’s session on March 25, where opposition from the far-left Die Linke and far-right Alternative for Germany (AfD) could have blocked the package.
A Shift from Fiscal Conservatism
The deal marks a notable departure from decades of fiscal restraint. Under the proposal, defense spending exceeding 1% of Germany’s gross domestic product (GDP) will be exempt from the debt brake, a rule introduced into the constitution in 2009 to limit borrowing.
Merz, who has long opposed reforming the debt brake, defended his reversal as a pragmatic response to changing circumstances. “Our friends in the EU are looking to us just as much as our adversaries and the enemies of our democratic and rules-based order,” he said ahead of the vote.
The Greens, initially hesitant to support the bill, secured guarantees from Merz that €100 billion of the special fund would be allocated to climate-related economic transformation measures. This concession helped secure their backing.
Defense Minister Boris Pistorius echoed Merz’s urgency, arguing that Germany’s security cannot be compromised by budgetary constraints. “Anyone who hesitates today is denying reality,” Pistorius said, defending the decision to prioritize defense investment.
The passage of the bill underscores a broader shift in German politics, as leaders grapple with the dual challenges of rising geopolitical tensions and the need for fiscal flexibility.