The approval of a 500 billion euro spending plan is expected today in the lower house of the German parliament. The bill will allocate billions of euros to the economy. The lower house of the parliament in Germany, which has the largest economy in Europe, will vote today on a massive borrowing package and constitutional amendment to revive the economy and increase military spending. Friedrich Merz, expected to be the new government’s chancellor, reached an agreement with the Green party on Friday, and objections to this plan by Germany’s Constitutional Court were rejected yesterday. If the borrowing package and constitutional amendment are approved in today’s vote, it is expected to be approved by the upper house of the parliament on Friday. INFRASTRUCTURE FUND
An infrastructure fund of approximately 500 billion euros to be spent over the promised 12 years will allocate 100 billion euros for climate and economic transformation, as demanded by the Greens. The remaining 300 billion euros from the fund will be spent on federal infrastructure investments, with 100 billion euros allocated to state governments. FINANCIAL ROOM FOR THE STATES
In addition to the 100 billion euros in the infrastructure fund, each of Germany’s 16 federal states will be allowed to run a structural deficit of up to 0.35% of its economic output, like the federal government, allowing for an additional expenditure of 16 billion euros. According to current laws, the states in Germany are not allowed to borrow. DEFENSE SPENDING
With the amendment to the “debt brake” that constitutionally limits public borrowing to 0.35% of the gross domestic product (GDP) and prevents it from exceeding, an exemption will be granted to allow defense spending to exceed 1% of GDP. The definition of defense spending includes civil security, intelligence, and assistance to countries under illegitimate attack. SUPPORT FOR UKRAINE
The vote on Germany’s 3 billion euro military aid to Ukraine in response to Russian aggression is expected to take place next week.