Agency Report –
The text of Germany’s new draft law for the planned multibillion-euro financial package for defence, infrastructure and climate neutrality was made public on Saturday.
It follows Friday’s agreement between the likely next chancellor Friedrich Merz and his conservative bloc made up of the Christian Democrats (CDU) and their Bavarian sister party, the Christian Social Union (CSU), the centre-left Social Democrats (SPD) and the Greens.
The draft states that the planned relaxation of the strict constitutional restriction on government borrowing, known as the “debt brake,” will apply not only to defence spending, but also to federal spending on civil protection, the intelligence services, cybersecurity and aid for countries that have been attacked in violation of international law.
In addition, it is to be stipulated in Germany’s Basic Law, the de facto constitution, that the investments from the debt-financed, €500 billion ($545 billion) special fund are additional.
Additional investments require an appropriate investment rate in the federal budget in the respective financial year, the draft states. However, it does not define exactly when the investment rate will be considered appropriate.
A total of €100 billion from the special fund will be added to the existing climate and transformation fund, which finances action on climate change and the climate-friendly restructuring of the economy, according to the draft. The phrase “climate neutrality by 2045” will also be written into the Basic Law, the draft states.
The parliamentary budget committee aims to discuss the planned changes to the Basic Law on Sunday. It is then scheduled to make a recommendation for the decisive Bundestag session on Tuesday.
