German CDU leader Friedrich Merz has said Germany may need to loosen its debt limit to finance increased defence spending, but warned other solutions should be prioritised. This comes as Chancellor Olaf Scholz argues that boosting defense spending is not sustainable through cuts and economic growth alone.
Germany’s debt brake limits government borrowing, restricting the budget deficit to less than 0.35% of GDP. However, some CDU members claim this rule contributes to economic decline by hindering infrastructure investments. Merz proposed cutting red tape and taxes to boost growth, reducing welfare benefits, and increasing defence spending to 3% of GDP.
Pressure from the US is also driving Germany’s defence spending push. President Donald Trump has demanded EU countries increase their military capabilities and raise defence spending to 5%. European Commission President Ursula von der Leyen said there is a need for “a surge in defence” due to years of under-investment.
The issue of immigration policy was also debated during the televised debate, with Merz passing a non-binding motion on tougher border control. The decision sparked protests, but Merz argued he is gaining support from certain segments of the electorate.
Source: https://www.euronews.com/business/2025/02/10/why-trumps-tariffs-could-push-europe-to-target-us-tech-services