Germany’s lower house of parliament is set to vote on Tuesday on a significant surge in borrowing, aimed at revitalizing Europe’s largest economy and strengthening national security. The proposed €500 billion fund would finance critical infrastructure projects and loosen constitutional borrowing limits, marking a sharp shift from Germany’s traditionally cautious fiscal policies.
The measure is backed by the conservatives, Social Democrats (SPD), and Greens, who believe they can secure the necessary two-thirds majority to amend the Constitution. Friedrich Merz, leader of the Christian Democrats and likely next chancellor, expressed confidence in the plan’s approval despite some internal opposition. SPD and Greens leaders also anticipate minimal resistance from within their ranks. With a margin of around 30 votes, the coalition remains optimistic about passing the legislation.
If approved in the Bundestag, the bill will move to the Bundesrat, which represents Germany’s 16 state governments. The path to approval there became clearer on Monday when the Bavarian Free Voters agreed to support the initiative. Lawmakers are pushing to pass the legislation before the new Bundestag takes office on March 25, fearing increased opposition from far-right and far-left members in the next parliament.
Merz has justified the urgency of the reforms by pointing to shifting U.S. policies under President Donald Trump and growing security concerns over Russia. He warns that without decisive action, Europe could face greater economic and geopolitical risks. However, critics within his own party accuse him of breaking campaign promises, as he had pledged fiscal restraint before the election.
Economists caution that while the spending plan may provide short-term stimulus, further reforms—such as reducing bureaucracy—are necessary for sustainable growth. Acknowledging these concerns, Merz emphasized the importance of continued reforms and difficult coalition negotiations ahead.