German Parliament Approves Historic €1 Trillion Fiscal Reform

The Bundestag has passed a constitutional amendment allowing unprecedented borrowing for defense, infrastructure, and climate investments, with final approval pending in the Bundesrat.

• The Bundestag approved the fiscal package with 513 votes, surpassing the two-thirds majority required to amend the constitution.
• The reforms include a €500 billion infrastructure fund, with €100 billion allocated to climate-related projects over 12 years.
• Defense spending exceeding 1% of GDP will now be exempt from the constitutional debt brake, marking a significant policy shift.
• The package also includes €5 billion in military aid for Ukraine in 2025, reflecting heightened geopolitical concerns over Russian aggression.
• The legislation now moves to the Bundesrat for final approval, where it will also require a two-thirds majority to pass.

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