Germany's Merz in race over debt brake reform to raise defence spending

Just over a week after his victory in Germany's federal elections, the country's likely next Chancellor Friedrich Merz is planning to hugely boost defence and infrastructure spending by loosening constitutional fiscal restraints known as the "debt brake".

Merz announced this week that his centre-right Christian Democratic Union (CDU) — together with its Bavarian sister party (CSU) and likely coalition partner, the Social Democrats (SPD) — will present a joint bill in parliament next week to ease the country's debt brake.

The bill includes a special €500bn fund to repair Germany's creaking infrastructure by financing projects outside of normal budget spending during the next decade.

Given that the debt brake is written into Germany's constitution, the proposals need a two-thirds majority in the Bundestag to pass, which means a race against time for Merz.

On Tuesday evening, Merz said that "in view of the threats to our freedom and peace on our continent," the motto "whatever it takes" must also apply to the country's defence.

"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 defence capabilities."

Since the confrontation between US President Donald Trump and his Ukrainian counterpart Volodymyr Zelenskyy in the Oval Office last week, defence has become a more urgent priority than ever in Germany, Europe and worldwide.

The Trump administration has suspended military aid and intelligence sharing with Ukraine in its war against Russia, which is part of a series of policy decisions that signal a closer alignment with Russian President Vladimir Putin.

Lifting the debt brake

The CDU and the centre-left SPD had already agreed in advance of Thursday's special EU summit in Brussels to increase defence spending.

A fund of €100 billion was approved in 2022 for the Bundeswehr. It is intended to provide a range of new equipment, including air defence, cyber defence and various weapons, ammunition and drones.

However, in order to reform the debt brake and boost defence spending by hundreds of billions of euros, several amendments to Germany's Basic Law are necessary.

The CDU plans to exempt "necessary defence spending" above 1% of GDP from the debt brake, which sets the structural deficit at a maximum of 0.35% of GDP.

The CDU, SPD and Greens still have a two-thirds majority in the current Bundestag, which they need to amend the constitution — including the debt brake.

However, after strong performances in last month's election, the far-right Alternative for Germany (AfD) party and the far-left Die Linke or The Left, would have a blocking minority in the new Bundestag.

Therefore Merz is in a rush to take advantage of the current reality and put the proposals up for a vote imminently, as the newly-elected parliament is set to convene by 25 March.

The possible amendment of the constitution post-election by the outgoing Bundestag has been criticised by some quarters.

Germans in favour of more defence spending

According to a Forsa survey commissioned by RTL and n-tv, 71% of Germans believe increasing defence spending is the right thing to do, while about a quarter are against it.

The highest levels of approval are among supporters of the CDU, SPD and Greens.

Katharina Dröge, chairwoman of the Greens parliamentary group in the Bundestag, said she regretted that the CDU is only now beginning to act.

"It remains to be seen whether we will ultimately agree to these amendments," she said in a statement. "The CDU/CSU and the SPD are perforating the debt brake a bit like a Swiss cheese, which raises the question of whether it would not ultimately be more orderly, more transparent and wiser to tackle a fundamental reform of the debt brake."

The Forsa poll found that 55% of respondents think Merz has deceived his voters. During the election campaign, the CDU's leader had ruled out a quick reform of the debt brake.

Furthermore, he frequently spoke about Germany's spending problem and emphasised that savings in the country's budget were necessary before new debts could be incurred.

Criticism from The Left and rejection from the AfD

The Left party, which opposes military spending and fears rearmament in Europe, told Euronews that it was against the CDU and SDP's approach, calling it "completely hasty and democratically highly questionable".

The party stressed that Germany's current financial resources should be sufficient for the time being.

"It should therefore be about a reorganisation of the Bundeswehr, not more money for armament," a spokesperson for The Left told Euronews.

Left-wing voters, however, are divided. 49% are in favour of Merz's plan, and 41% are against it, the Forza survey shows.

However, AfD is the only party where a majority of voters are against the plan, according to the opinion poll.

"The AfD will not agree to this," Bernd Baumann, parliamentary leader of the far-right party, told Euronews.

"Germany does not have a revenue problem, but a spending problem. The funds needed for the military and infrastructure would be available in the budget if the money were spent wisely."