German Parliament to Approve Massive Spending Plan on March 25, Impacting EU Defense

On March 25, the German Parliament is set to approve a substantial spending plan aimed at bolstering defense, infrastructure, and climate policies. The legislation, already approved by the outgoing parliament, allows for increased government borrowing beyond normal debt limits, allocating funds for defense, security, assistance to Ukraine, and climate initiatives. The plan includes up to 100 billion euros for climate policies and is backed by CDU leader Friedrich Merz, who envisions it as a step toward a new European defense community. Fitch Ratings anticipates additional spending of 900 billion to 1 trillion euros from Germany over the next decade. While facing opposition from some parties, the CDU, SPD, and Greens have secured the necessary majority to pass the amendments. The move marks a significant shift from previous fiscal policies and could lead to pre-revolutionary conditions in Germany, according to some analysts. Key to watch is the final vote and the subsequent implementation of these policies, which are expected to significantly impact Germany's economic and defense posture within the EU.