Germany Approves Huge Spending Boost for Defense, Infrastructure

German lawmakers on Tuesday voted for a colossal defense and infrastructure spending package proposed by chancellor-in-waiting Friedrich Merz following concern over the US stance on the Ukraine war and Europe’s security.

Local media have labeled the plans – which could pave the way for more than one trillion euros in spending over the next decade – as a fiscal “bazooka” for Europe’s top economy.

The hastily drawn plans, which represent a radical departure for a country traditionally reluctant to take on large amounts of debt or to spend heavily on the military, were passed with 513 votes in favor and 207 against.

Speaking to parliament ahead of the vote, conservative Merz said it was vital to strengthen the country in light of Russia’s “war of aggression against Europe.”

“It is a war against Europe and not just a war against the territorial integrity of Ukraine,” Merz said. 

Merz’s CDU/CSU and their likely future coalition partners, the Social Democrats (SPD), plan to exempt defense spending from Germany’s strict debt rules and to set up a €500-billion ($545-billion) fund for infrastructure investments over 12 years.

As well as boosting domestic investments, the spending package is expected to clear the way for an extra €3 billion of support for Ukraine in 2025.

Ahead of the vote, European stocks rose and German investor sentiment posted its biggest increase in over two years in anticipation of the spending boost.

Merz, 69, had urged lawmakers to approve the measures at a time when US President Donald Trump’s outreach to Russia and hostility towards Ukraine have shaken Europe and cast doubt over the future strength of transatlantic ties. 

‘European defense community’

Merz said strong relations with the US were “indispensable” but Europe needed to do more to ensure its own security and Germany should play a leading role. 

The spending boost is “nothing less than the first major step towards a new European defense community” that could also include non-EU members like Britain and Norway, he added.

Defense Minister Boris Pistorius, from the SPD of outgoing Chancellor Olaf Scholz, justified the mega-spending by saying “we are facing a new era for Europe, for Germany, for NATO, and for future generations.”

He argued that boosting defense on the continent would strengthen the transatlantic alliance in the long term “and place it on two legs, namely North America and Europe.”

Merz’s conservatives, who won an election in February, agreed the plans to boost Germany’s under-resourced military and ailing economy as part of their initial coalition talks with Scholz’s SPD in early March.

But instead of waiting until the new government is formed, the parties agreed to seek approval for the plans from the outgoing parliament. 

Even in the outgoing assembly, the CDU/CSU and SPD needed the support of the Greens to help them reach the two-thirds majority required to modify the debt brake.

Far-right opposition

The Greens had threatened to withhold their support but a deal was struck late last week with Merz agreeing that €100 billion of the infrastructure fund would be dedicated to climate-protection measures.

In the next Bundestag, the far-right and Moscow-friendly Alternative for Germany (AfD) and the far-left Die Linke – which both opposed the plans – would have had the numbers needed to block them.

Before the vote, Bernd Baumann of the AfD accused Merz of ignoring the will of voters by seeking to push the vote through the old parliament.

“The new Bundestag is the legitimate one” because “it has new majorities that the people want,” Baumann said, charging that Merz “wants to buy himself the chancellorship from the SPD and the Greens, like in a banana republic.”

Lars Klingbeil of the SPD said that the massive new spending aimed to “maintain peace in Europe” but also “invest in advancing the economy and strengthening social cohesion.”

He said the measures, “perhaps the largest package in the history of our country,” would therefore also help counter “division and polarization.”

The plans must also still be voted through the upper house of parliament on Friday, where they also require a two-thirds majority.

Coalition negotiations will then continue between the two big parties, with Merz aiming to have a government in place by Easter on April 20 or soon after.

If all goes according to plan, the new parliament will vote on whether to appoint him as chancellor on April 23.