Bundesrat approves debt reform as Germany shifts from austerity
Press Hub UCapital
Share:
The Bundesrat today approved the constitutional debt reform, promoted by future German Chancellor Friedrich Merz, with 53 votes in favor – surpassing the two-thirds majority required – no votes against, and only four abstentions from the federal states of Brandenburg, Rhineland-Palatinate, Saxony-Anhalt, and Thuringia.
The previous rule prevented Germany's public debt from exceeding 0.35% of GDP, but with the new constitutional reform, Germany bids farewell to austerity policies. Additionally, a €500 billion fund will be created, outside the debt limit, to improve Germany’s infrastructure and to make significant investments in defense.
The reform had already passed on Tuesday in the lower house of the German Parliament – the Bundestag – and now, with the vote of the upper house representing the 16 federal states, the measure has received final approval. The reform will allow the German government to significantly ease the constitutional mechanisms that previously governed the increase of Germany's public debt and restricted spending and investments. The only remaining step is the signature of German Federal President Frank-Walter Steinmeier, after which the reform will officially come into effect.
The previous rule prevented Germany's public debt from exceeding 0.35% of GDP, but with the new constitutional reform, Germany bids farewell to austerity policies. Additionally, a €500 billion fund will be created, outside the debt limit, to improve Germany’s infrastructure and to make significant investments in defense.
The reform had already passed on Tuesday in the lower house of the German Parliament – the Bundestag – and now, with the vote of the upper house representing the 16 federal states, the measure has received final approval. The reform will allow the German government to significantly ease the constitutional mechanisms that previously governed the increase of Germany's public debt and restricted spending and investments. The only remaining step is the signature of German Federal President Frank-Walter Steinmeier, after which the reform will officially come into effect.