Germany's Bold Fiscal Move: Parliament Backs Massive Borrowing Shift

Germany's parliament approved a significant increase in government borrowing, altering debt rules. This change, initiated by conservatives and Social Democrats, aims to fund infrastructure and defense. The legislation will now go to the Bundesrat for approval, with expectations of it passing smoothly.

Germany's outgoing parliament has passed a historic measure to increase government borrowing, marking a significant shift in the nation's fiscal policy. The move includes a proposed €500 billion fund, aimed at revitalizing infrastructure and strengthening defense capabilities.

This bold financial strategy was developed by the conservatives, led by Chancellor-in-waiting Friedrich Merz, alongside the centre-left Social Democrats, as they negotiate forming a new government following recent elections.

To gain the required two-thirds majority in parliament, last-minute amendments were integrated to meet the demands of the Greens party. The legislation will now be presented to the Bundesrat, Germany's upper house, where it is expected to pass on Friday.