German parliament passes historic spending package to expand military

Germany's lower house of Parliament has voted to approve a major spending package designed to expand the country's armed forces and improve infrastructure.

The plan – proposed by Friedrich Merz, who won last month's national elections – will earmark $500 billion for infrastructure expenditure across Europe's biggest economy.

The package also saw lawmakers vote to loosen the country's stringent borrowing rules – known in Germany as the 'debt brake' – in order to boost spending for defense.

In order to make way for the record military spend, constitutional changes were needed to make defense spending exempt from the debt brake, which limits how much the German government can borrow. 

Following Tuesday's vote, defense spending will be exempt from the borrowing rules, paving the way for hundreds of billions of dollars to be channeled into Germany's army, navy and air force.

To change the constitutionally enshrined borrowing rules, a two-thirds majority was required in the parliament, which was achieved after weeks of negotiation between party leaders.

Speaking before lawmakers, the incoming Chancellor Friedrich Merz stressed the need for unity amongst Europeans.

"We have for at least a decade felt a false sense of security," he said. "The decision we are taking today on defense readiness... can be nothing less than the first major step towards a new European defense community."

Tense times for transatlantic alliance

In the weeks leading up to the crucial vote, Merz argued urgency was required to enact the reforms, given geopolitical tensions on the European continent, and lingering questions over the Trump administration's commitment to the transatlantic alliance.

Following his election win on February 23, he called on other EU capitals to build up their defense capabilities, saying it was now "five minutes to midnight for Europe."

"I would never have thought that I would have to say something like this in a TV show, but after Donald Trump's remarks last week… it is clear that this government does not care much about the fate of Europe," Merz told German public broadcaster ARD after his conservatives won the vote.

Merz's conservative CDU party remains in negotiations with the center-left Social Democrat party to form a coalition government. The current parliament, which was led by outgoing Chancellor Olaf Scholz, rises on Tuesday for the final time. A new parliament is expected to sit on March 28.