Germany’s centrist parties, led by likely next Chancellor Friedrich Merz, have reached a deal to spend big on defense, climate, and more. The agreement aims to respond to President Trump’s moves to pull back American security guarantees for Europe.
Merz secured the votes to allow extensive new government spending, including investments in German competitiveness and reducing fossil fuel emissions. This clears the way for a raft of measures in Parliament next week. Key points include:
* Lifting Germany’s hallowed limits on government borrowing for military spending
* Exempting defense spending above 1% of GDP from those limits
* Broadening “defense” to include intelligence, information security, and more
The deal is seen as a response to Trump’s moves, with lawmakers calling it an important signal to Ukraine, Vladimir Putin, and Donald Trump. The Green Party secured 3 billion euros in support for Ukraine and agreed to the infrastructure fund, which will spend 100 billion euros on new projects to strengthen the economy and climate.
The move marks a shift from Germany’s signature economic policy of constrained spending after the 2008 financial crisis. This could now enable Germany to take a stronger leadership role in addressing European security challenges.
“Economists have long said Germany needs to invest in infrastructure,” Merz said, adding that “there will be no lack of financial resources to defend freedom and peace on our continent.” The deal is seen as a step towards kick-starting an economy that shrank last year.
Source: https://www.nytimes.com/2025/03/14/world/europe/germany-defense-climate-spending-deal.html