Bundestag set to vote on historic spending reform
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Bundestag – the lower house of German parliament – will vote today on a proposal put forward by the CDU, the center-right party that won the last elections, which seeks to amend the 2009 constitutional law on public debt, established by former Chancellor Angela Merkel.
The current law prevents Germany's public debt from exceeding 0.35% of GDP, except in exceptional cases such as a pandemic. Merz’s reform proposes a €500 billion fund, exempt from the debt cap, to improve Germany’s infrastructure – such as hospitals and railway networks – but also to invest in defense, since U.S. role in European’s defense is fading away.
Friedrich Merz’ alliances
This reform will need to be approved by two-thirds of the parliament. In this regard, future Chancellor Merz has sought to build alliances and find compromises to ensure the reform’s approval. An agreement has been reached between the CDU, SPD, and the Greens – who, aware of their influence in the vote, have received guarantees for future investments in renewable energy sources - they currently have a margin of 30 deputies.
CDU’s race against time
However, the real issue is timing: on Tuesday, March 25th, the new parliament will be inaugurated, which will have a larger number of deputies from the far-right party AfD, that is planning to vote against the debt reform. This might create the need for further compromises. For Merz – and CDU – this reform is a crucial issue. German economy is in a two-year recession, and so-called "debt brake" reform prevents the government from increasing debt to boost growth, despite having room to do so. If approved by the Bundestag, the reform will then have to pass through the Bundesrat – the upper house of parliament.
The current law prevents Germany's public debt from exceeding 0.35% of GDP, except in exceptional cases such as a pandemic. Merz’s reform proposes a €500 billion fund, exempt from the debt cap, to improve Germany’s infrastructure – such as hospitals and railway networks – but also to invest in defense, since U.S. role in European’s defense is fading away.
Friedrich Merz’ alliances
This reform will need to be approved by two-thirds of the parliament. In this regard, future Chancellor Merz has sought to build alliances and find compromises to ensure the reform’s approval. An agreement has been reached between the CDU, SPD, and the Greens – who, aware of their influence in the vote, have received guarantees for future investments in renewable energy sources - they currently have a margin of 30 deputies.
CDU’s race against time
However, the real issue is timing: on Tuesday, March 25th, the new parliament will be inaugurated, which will have a larger number of deputies from the far-right party AfD, that is planning to vote against the debt reform. This might create the need for further compromises. For Merz – and CDU – this reform is a crucial issue. German economy is in a two-year recession, and so-called "debt brake" reform prevents the government from increasing debt to boost growth, despite having room to do so. If approved by the Bundestag, the reform will then have to pass through the Bundesrat – the upper house of parliament.