Agreement in Germany on the proposal to change the Constitution, modifying one of its most famous laws: the debt brake, the debt brake which forces the country to maintain a balanced budget.
According to German media, CDU-CSU and SPD, the two parties that will form the Grand Coalition on which the new government led by Chancellor Friedrich Merz will be based, have reportedly found an agreement with the Verdi on the multi-billion dollar defense and infrastructure package, with a consequent change to the debt brake.
A race against time
In recent weeks, CDU and SPD have announced their intention to set up a fund of well 500 billion of euros to be spent in 10 years to renew and strengthen the infrastructure Germans. In parallel, Chancellor-designate Merz has decided to increase defense spending to 3% of GDP.
To do this, however, a fundamental obstacle must be overcome: the debt brake, a constitutional law approved in 2009 that requires the country to maintain a balanced budget, with a primary deficit limit of almost zero: 0,35% of GDP.
CDU and SPD would in fact like not to apply the "debt brake" to military spending that exceeds 1% of GDP, but also to the 500 billion promised for infrastructure. In numbers, if 1% of GDP is equal to 45 billion per year, just for rearmament we are talking about about 90 billion euros more that would be freed up every year, to which are added 50 billion per year for infrastructure.
However, since this is a constitutional amendment, approval of the reform requires a two-thirds majority. Unattainable numbers when the new parliament is established, considering that the far-right AfD has already said it is against it and will count on 150 deputies. The two parties therefore aim to approve the proposal before the inauguration scheduled for the end of March.
The agreement with Verdi
The only way to approve the amendment before the new government takes office is to get the OK from the Greens. And the green light, according to German media, arrived in the last few hours.
The details of the agreement are not yet clear, but Reuters, citing a source close to the party, reports that in exchange for the support that will guarantee the two-thirds majority, the Greens would have obtained 100 billion euros of funds to be allocated to ecological transformation and climate and no longer 50, as proposed yesterday by CDU leader Friedrich Merz.
The vote on the text will take place on Tuesday in the lower house of deputies, the Bundestag.
Frankfurt Stock Exchange Runs
The news has given wings to the Frankfurt Stock Exchange which accelerated upwards and around 14.30 pm rose by 1,7% celebrating the approval by the Greens of the Merz plan and recording the best European performance. Strong purchases on defense stocks, with Rheinmetall which goes into orbit and gains over 7%. It also runs Thales in France (+4,5%), while in Milan Leonardo in Milan it gains 6,8%, benefiting from the arms race.
