March 19, 2025 (EIRNS)—A change introduced by the Greens in the constitutional bill voted up by the Bundestag potentially increases the German financial “bazooka” to €1.7 trillion, experts told the leading German financial daily Handelsblatt. Other critics of the deal speak about €1.8 trillion.
Originally, the CDU/CSU and SPD wanted to exempt defense spending from the debt brake if it exceeded 1% of gross domestic product (GDP), the economic daily Handelsblatt wrote. “The Greens have succeeded in expanding the definition of security. Now, ‘Federal spending on civil and population protection, as well as on intelligence services, on the protection of information technology systems, and on aid to states attacked in violation of international law’ can also be exempted, as stated in the joint motion for the amendment to the Constitution. The latter formulation includes aid to Ukraine.”
“‘An even broader definition of the defense concept, or the inclusion of additional budget items, could further increase the scope', says Tobias Hentze of the German Economic Institute (IW). According to his calculations, which were made available to Handelsblatt, the scope could increase from €9 billion to €22 billion this year alone due to the new definition.”
“The compromise with the Greens would allow the CDU/CSU and SPD to take out additional loans totaling €13 billion—regardless of the debt brake. ‘What a new Federal government will use this leeway for is open and up to them: Anything from a mother’s pension to tax cuts is possible', says Hentze.”
An example of how the loophole could be used is Ukrainian refugees. Financing their stay in Germany can be seen as consequences of the war.
“One thing is clear: the changes to the Basic Law will significantly increase the government’s borrowing leeway. After all, the Federal states will also be allowed to borrow in the future. With full utilization of the infrastructure special fund, a permanent 3% defense spending rate, and taking into account the new debt leeway for federal states, the nominal debt level in ten years will be around €1.7 trillion higher than without these changes, says IW researcher Hentze.”
