Germany could face its third consecutive year of recession this year; however, the country’s likely next conservative CDU chancellor, Friedrich Merz has proposed allocating 3 to 3.5% of its GDP towards defense. This initiative is part of a broader plan to invest approximately €1.5 trillion in public infrastructure and military enhancements over the next decade, primarily through borrowing.
On Tuesday, March 18, members of the outgoing government coalition are scheduled to vote on the proposal to suspend the debt brake and establish a €500 billion investment fund. On March 13, during a session in the Bundestag, these members were presented with three proposals for constitutional amendments:
- The first proposal seeks to relax the stringent debt brake regulation for the defense budget once it surpasses €40 billion.
- The second proposal aims to empower regional governments to incur a specific level of debt to support their investment initiatives.
- The third proposal pertains to the creation of a special fund amounting to €500 billion over a ten-year period, intended to finance infrastructure projects in areas such as digital technology, energy, education, and railways.
The allocation of funds depends on the results of two votes — the decision of the Bundesrat on Tuesday 18 and the decision of the Bundestag on Friday 21. A two-thirds majority is required for each of these votes. However, on Friday Merz declared he had secured the crucial backing of the Greens for a massive increase in state borrowing, clearing the way for the outgoing parliament to approve the unpopular proposed debt package.
Merz’s plot to bypass the incoming Bundestag by pushing through the €1 Trillion rearmament scheme before the new parliament has the time to constitute itself, is now facing last-minute legal challenges…
IMAGE: Friedrich Merz, the man on course to be Germany’s chancellor
Straits Times reports…
Merz’s borrowing plans face last-ditch challenge in German court
BERLIN – Plans by Germany’s chancellor-in-waiting Friedrich Merz to unleash a massive state borrowing programme were hit by last-minute legal challenges from opposition parties announced on Monday ahead of a parliamentary vote.
The far-right Alternative for Germany challenged the vote at the constitutional court, arguing the Bundestag had not given time for outside experts to scrutinise plans that lifted the euro and shares last week.
Independent lawmaker Joana Cotar also said she had filed a complaint in order to scupper the vote, while three lawmakers from the pro-business Free Democrats (FDP) also plan petitions, the DPA news agency reported.
“The federal government has so far been unable to answer very simple and fundamental questions on this,” FDP finance expert Florian Toncar told DPA.
Merz wants to push a 500 billion euro ($544 billion) infrastructure fund and sweeping changes to debt rules through the outgoing parliament as a way to revive ailing growth and boost defence spending in Europe’s largest economy.
He had secured the crucial backing of the Greens party last week to pass the measures in the outgoing parliament, fearing they could be blocked by an enlarged contingent of far-right and far-left lawmakers in the next Bundestag starting March 25.
The parliamentary budget committee had approved the plans on Sunday. The measures have already survived earlier legal challenges last week from the AfD and the Left party.
Merz’s conservatives and the Social Democrats (SPD), who are in talks to form a coalition government after elections last month, are jointly pushing the measures.
Separately, SPD co-chief Saskia Esken told the broadcaster ZDF on Monday that her party’s leadership will speak with individual lawmakers within their own ranks who could be wavering before Tuesday’s vote…
Continue this analysis at Straits Times
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