# Germany’s future coalition partners to relax debt rules to boost defence budget

Conservative alliance and Social Democrats to propose exempting spending of more than 1% of GDP on defence

Agencies

Tue 4 Mar 2025 15.01 EST Last modified on Tue 4 Mar 2025 15.26 EST

The prospective partners in Germany’s next government have said they will seek to loosen rules on running up debt to allow for higher defence spending.

They said they will also seek to set up a huge €500bn ($533bn) fund to finance spending on Germany’s infrastructure over the next 10 years.

Centre-right election winner , who is trying to put together a coalition government with the centre-left Social Democrats of the outgoing chancellor, Olaf Scholz, said the two sides would propose exempting spending of more than 1% of gross domestic product on defence from rules that limit the government’s ability to borrow money.

“In view of the increasing threat situation, it is clear to us that  – and with Europe, the Federal Republic of Germany – must now very quickly make very big efforts very quickly to strengthen the defence capability of our country and the European continent,” Merz told reporters at a hastily convened news conference.

“We are counting on the United States of America standing by our mutual alliance commitments in the future as well,” he said. “But we also know that the funding for the defence of our country and alliance must now be expanded significantly.”

The necessary decisions “no longer tolerate any delay, at the latest since the most  by the American government,” Merz said.

He added that his bloc and the Social Democrats will bring legislation on the exemption for defence spending and the infrastructure package, which will be financed by loans, to Germany’s outgoing parliament next week.

Merz also said on Tuesday that he would support the immediate approval of a €3bn aid package for  that had been held up in parliament for weeks.

Merz told reporters at a press conference that he would meet Scholz on Wednesday “to speak about the urgent help needed for Ukraine, around 3.0 or €3.5bn, which … can be approved now as off-budget expenditure”.

Shortly after Russia launched its full-scale invasion of Ukraine in 2022, Scholz pledged to increase Germany’s defence spending to the current Nato target of 2% of gross domestic product and announced the creation of a €100bn special fund to modernise the military.

But that fund, with which Germany has met the 2% target, will be used up in 2027, and the advent of the new US administration has brought a new sense of urgency to efforts to further beef up the military and defence spending.

Germany’s “debt brake”, introduced more than a decade ago, allows new borrowing to the tune of only 0.35% of annual gross domestic product, though it can be suspended for emergencies that are out of the state’s control.

It was suspended for three years after the Covid-19 pandemic started in 2020 to allow for large amounts of borrowing to finance various support and stimulus packages.

_Associated Press and AFP contributed to this report_

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