German Parties Reach Agreement to Ease Debt Brake, Boost Spending

Four German political parties, controlling over two-thirds of parliamentary seats, reached a historic agreement on Friday, March 14, to ease the country's debt brake. This move aims to promote a significant spending package focused on defense and infrastructure, expected to have a considerable impact on the economy. The agreement, spearheaded by Friedrich Merz, leader of the Christian Democratic Union (CDU), involves reforming borrowing limits to increase defense spending. It also includes relaxing the debt brake for states and establishing a special fund of 500 billion euros for infrastructure investments over the next decade. Initially, the Green Party opposed aspects of the package. However, they agreed to support the initiative after securing concessions, including the allocation of 100 billion euros to a climate and economic transformation fund.