Merz wins support for surge in spending, proclaiming ‘Germany is back’ | Reuters

German Chancellor-elect Merz secured Greens' backing for a historic €500B infrastructure and defense funding package requiring constitutional amendments to Germany’s debt rules, with Tuesday’s vote likely to pass. The package directly responds to security concerns about Russia and US policy shifts under Trump, expanding defense spending definitions to include civil defense, IT security, and aid to attacked states like Ukraine. Constitutional changes will exempt military spending above 1% of GDP from traditional caps, potentially allowing unlimited borrowing for security priorities. Markets responded positively with strong gains across German indexes. Critics accuse Merz of abandoning campaign promises against increased spending, though economists project the package could boost German GDP by 2% annually over the next decade while introducing potential inflation risks.​​​​​​​​​​​​​​​​