German Parties Reach Agreement on €500 Billion Infrastructure and Defense Package

Germany's CDU, CSU, SPD, and Green parties have reached a compromise on a debt-financed financial package for defense and infrastructure. The agreement involves easing the debt brake for defense spending and establishing a €500 billion special fund to modernize infrastructure over twelve years. €100 billion from the special fund will be allocated to the Climate and Transformation Fund (KTF), with another €100 billion going to the federal states for municipal heating and energy planning. States previously restricted from borrowing will now have the option to incur debt up to 0.35 percent of their economic output annually. Defense expenditures exceeding one percent of GDP will be exempt from the debt brake. The agreement also includes an increase of €3 billion in aid to Ukraine. The package requires a two-thirds majority in both the Bundestag and Bundesrat due to the debt brake being enshrined in the constitution.