By Sarah Marsh

Berlin (Reuters) – The Bundestag, the lower room of the outgoing German Parliament, began an extraordinary session on Thursday in order to debate a fund of 500 billion euros for infrastructure and a reform of the “debt brake” which limits the federal expenses of the greatest economy in the euro zone.

Winner of the February legislative elections, the next Chancellor Friedrich Merz is trying to obtain the green light on these two projects before the constitution of the new Parliament, on March 25, in which a extended contingent of far -right deputies and left radicals could complicate the situation.

The manager presented his proposals on Thursday as a test for Germany to maintain himself on the international scene and preserve European security.

“The whole world has its eyes riveted on Germany these days and these weeks. We have a task (…) which goes far beyond the borders of our country and the well-being of our people,” he said during the examination of his projects.

“We must live up to this responsibility,” added Friedrich Merz, whose proposals must in particular allow the country to spend more for defense while American policies vis-à-vis the war in Ukraine let fear for the security of the old continent.

The fund of 500 billion euros and the reform of the “brake on debt”, which requires modifying the Constitution, emanate from a joint proposal of the Christian Democratic Union (CDU), the party of the next Chancellor, and of the Social Democratic Party (SPD) unveiled at the beginning of the month and which shaken the financial markets.

But the proposal which detonates in a country known for its budgetary rigor is not unanimous. The conservatives and social democrats, in talks to form a government coalition, must in particular convince the Greens to obtain the majority of two thirds in the Bundestag necessary to modify the Constitution.

“What more do you want?”

Friedrich Merz said Thursday that he had tried to respond to the concerns of the Greens by proposing to expand the field of defense spending to include those of civil and intelligence defense. “What do you want more than us in such a short time?” He said.

Irene Mihalic, an influential deputy of the Greens, said that there would still be a sufficient majority, although different, to reform the “brake to debt” within the new parliament, thus suggesting that his party could continue to oppose the project.

“Instead of negotiating with the Greens and the left, you try to do it with the old majority,” she said to Friedrich Merz.

Greens’ leaders, Katharina Dröge and Britta Hasselmann had previously confirmed that their party would vote against the proposals of the next Chancellor, a position already expressed at the start of the week, in particular because the negotiations did not bring the points of view.

The Bundestag vote on Friedrich Merz’s projects is scheduled for March 18 before a visit to the Bundesrat, which represents the regions in Parliament.

Another pitfall to their realization, the Constitutional Court could render its decision this Thursday on appeals filed by the extreme right alternative formation for Germany (AFD) and the Radical Left Party Die Linke on these projects.

IFW notes its growth forecast for 2026

Since 2009, the Federal Constitution has imposed a “debt brake” which limits structural debt up to 0.35% of GDP.

Friedrich Merz intends to soften this provision in order to create a special fund of 500 billion euros over ten years for the modernization of infrastructure and the revival of the economy.

Although Acertains, Friedrich Merz’s projects prompted the German Economic Institute IFW to note its growth estimate for Germany in 2026 on Thursday, anticipating a beneficial effect of an increase in public spending.

According to the IFW, the growth of the German gross domestic product is likely to reach a level of 1.5% next year, instead of 0.9% provided by the Institute in December.

Michael Pfister, exchange analyst at Commerzbank, said he would carefully follow the outcome of the debate.

“If budgetary measures are implemented, the markets expect higher growth in Germany, but also in the euro zone,” he said.

The yields of the reference obligations in the euro zone have remained close to their highest levels for 17 months, in anticipation of a much larger debt.

In addition to the proposals of the CDU and the SPD, the Bundestag examined Thursday at first reading of the competing projects of the Greens and the Liberal Democratic Party (FDP) aimed at increasing defense funds.

(Report of Sarah Marsh, Holger Hansen, Andreas Rinke, Ludwig Burger, Rachel More, Rae Wee and Lucy Raitano, written by Sarah Marsh and Matthias Williams, Blandine Hénault and Benjamin Mallet, edited by Augustin Turpin)

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