By Canadian Press

Germany’s likely next governing parties seek looser debt rules for more defense spending

Mar 4, 2025 | 12:26 PM

BERLIN (AP) — The prospective partners in Germany’s next government said Tuesday that they will seek to loosen the nation’s rules on running up debt to allow for higher defense spending.

They said they also will seek to set up a huge 500 billion euro ($533 billion) fund to finance spending on Germany’s infrastructure over the next 10 years.

Center-right election winner Friedrich Merz, who is trying to put together a coalition government with the center-left Social Democrats of outgoing Chancellor Olaf Scholz, said the two sides will propose exempting spending of more than 1% of gross domestic product on defense from rules that limit the government’s ability to borrow money.

Shortly after Russia launched its full-scale invasion of Ukraine in 2022, Scholz pledged to increase Germany’s defense spending to the current NATO target of 2% of gross domestic product and announced the creation of a 100 billion euro special fund to modernize the military.

But that fund, with which Germany has met the 2% target, will be used up in 2027, and the advent of the new U.S. administration has brought a new sense of urgency to efforts to further beef up the military and defense spending.

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Germany’s “debt brake,” introduced more than a decade ago, allows new borrowing to the tune of only 0.35% of annual gross domestic product, though it can be suspended for emergencies that are out of the state’s control. It was suspended for three years after the COVID-19 pandemic started in 2020 to allow for large amounts of borrowing to finance various support and stimulus packages.

The Associated Press