Bundestag Votes on Historic Fiscal Reform Package

On March 18, 2025, Germany's Bundestag voted on a significant fiscal package aimed at amending the constitution's debt brake, facilitating increased government spending on defense, infrastructure, and climate protection. The new legislation allows for exemptions from the debt brake, enabling potentially unlimited loans for defense initiatives, including military aid to Ukraine, and establishes a €500 billion infrastructure fund. This reform, pushed by the Union and Social Democratic Party (SPD), requires a two-thirds majority to pass, and was urgently pursued before the newly elected parliament convenes, which could hinder the reforms. Opposition parties raised concerns regarding the rapid pace of the legislation and its long-term fiscal implications. Support from the Greens was crucial to secure the necessary majority, as they negotiated terms to include climate-focused investments in the fund. The vote reflects Germany's response to increasing international tensions and the need for economic growth.