German soldiers, photo: Daniel Lob / AFP
The Conservatives and Social Democrats, who are negotiating the formation of a new government in Germany, are considering the creation of two special funds to finance defence and infrastructure modernisation. The total investment could reach several hundred billion euros. This was reported by Reuters.
The issue was discussed during talks between the CDU party led by Friedrich Merz, which won the parliamentary elections, and the Social Democrats. According to Bild, the investment is much larger than the €100 billion fund set up in 2022 after Russia’s full-scale invasion of Ukraine.
According to preliminary estimates, the needs of the German army are estimated at €400 billion, and infrastructure modernisation will require another €500 billion.
To avoid the restrictions of the debt brake, a rule that prohibits a budget deficit of more than 0.35% of GDP, politicians propose to move the financing of these projects outside the state budget. To do this, they need to get the support of two-thirds of Bundestag members by the end of March, while the current parliamentary composition is in place.
Negotiations on the formation of a new government are progressing constructively, and according to Thorsten Fry, a representative of the Conservatives, a coalition agreement could be concluded by Easter on 20 April.
In addition to the creation of the funds, political circles are discussing the possibility of easing the “debt brake”, which is becoming an increasingly controversial norm in the face of the challenges Germany is facing.
