German parties agree to loosen the fiscal rules for the major overhaul of the military, economy | Business and Economics News

The German Mertz says CDU/CSU and SPD will submit a proposal to the lower house of Parliament Bundestag next week.

Countries that hopes to create the next German government have agreed to set up an infrastructure fund of $ 500 billion ($ 536.9 billion) and rules for loan reproduction, a tectonic change in the largest economy in Europe.

The Conservatives of Friedrich Mertz and the Social Democrats (SPD), who negotiates to create a coalition after the national elections last month, will set their proposals to the leaving German parliament next week.

Mertz, probably the next chancellor in Germany, has taken the moment after Donald Trump's return to the White House throw the transatlantic union into a disturbanceAnd he stressed Europe's urgency to strengthen its own defenses.

Trump has frozen military assistance to Ukraine after a bitter clash last week with his President Volodimir Zelenski, strengthening fears that the United States can reach a deal with Russia to end the war in Ukraine while being excluded from Europe.

Economists and investors have long urged Germany to reform their constitutionally laid -off restrictions on borrowing countries – known as The “debt brake” – To release the investment and support the economy that has been concluded in the last two years.

The reform will mark a discount on the borrowing rules imposed after the global financial crisis in 2008, which many say are outdated and will support Germany in a fiscal strait.

Amendment of the constitution

Mertz said CDU/CSU and SPD will submit a proposal to the Bundestag lower house of Parliament next week to amend the Constitution, so that the costs of defense over 1 percent of economic production are released from the debt brake.

He promised to do “everything that is needed” when it comes to protection “in the light of threats to our freedom and peace on our continent.”

An expert committee will separately develop a proposal to modernize the debt brake to increase investment constantly.

According to an InSA poll, 49 percent of the Germans support the loosening of the debt brake, while only 28 percent are against it. But changing the rules for the debt and the creation of a special fund requires a majority of two -thirds in parliament.

Conservatives and SPD are in a hurry to cross the departing parliament, given the far -right and far left parties, they will have a blocking minority in the next parliament after they firmly bring in the elections last month.

Thehe Left He threatens a legal challenge if Germany is taking on a new debt to finance defense costs.

The Green Party, whose support is needed to get the long -line brake reform, said it would consider the proposals but did not make a firm commitment.

As the markets gathered after the announcement, skeptical voices appeared.

Cyril-Alexander Schwartz, a constitutional lawyer at the University of Würzburg, said it was “extremely problematic” for the leaving parliament to make such large binding decisions.

The German newspapers said Mertz violated the promise of the fiscal rectum campaign only 10 days after the election.

“G -N Merz, this is a voter fraud!” warn the best-selling Bild paper. “Mertz made 180 turn in record time,” Handelsblatt wrote.

Left documents were more lenient. “Well, Mertz violates his promise to the campaign,” writes Sueddeutsche Zeitung.

Friedrich Heineman of the ZEW Institute for Economic Research said the debt to German Debt ratio could exceed 100 percent by 2034. It is already about 64 percent, far under other major industrialized countries such as the United States, France or Japan.

The United States has repeatedly pressed Germany to increase its defense spending on a major overhaul of military, who felt neglected from the end of the Cold War and diverted weapons to support Ukraine in the war against Russia.