German President Frank-Walter Steinmeier signed a law that eases restrictions on government debt, allowing for increased spending on defense, infrastructure, and climate initiatives.
This decision, approved by parliament earlier this week, is the final step for the changes to come into effect after publication in the Federal Law Gazette. As a result, Germany is loosening its debt brake, which limits government spending on defense, civil protection, intelligence, and cybersecurity. Now, such expenses can be excluded from the calculation of national debt if they exceed 1% of GDP.
A special fund will also be created, exempt from the debt brake, with the possibility of loans up to 500 billion euros. These funds will be used to modernize the country’s outdated infrastructure, including 100 billion euros for federal states, as well as another 100 billion euros for environmental projects and the “green transition.”
