Germany's incoming Chancellor Friedrich Merz has begun negotiations with the Social Democrats to quickly approve a special defense spending package of 200 billion euros ($210 billion). The new package will be twice as large as the one approved by the previous parliament. Bloomberg writes, UNN reports.
Representatives of Merz's Christian Democrats and the SPD are discussing ways to circumvent Germany's tight borrowing restrictions in order to free up resources for the country's decaying military.
Merz has promised to increase investment in the German military to counter Russian aggression, but his plans have run into trouble after fringe parties secured a blocking minority in the next parliament. With fewer than two-thirds of the seats, the mainstream parties do not have the votes to ease constitutional restrictions on government borrowing. But they could get around this problem by pushing through a vote before the new parliament convenes for its first session on March 24.
Merz, whose party won the Bundestag elections, is under pressure to move quickly on defense as the rest of the European Union reacts to Donald Trump's intentions to push for a quick resolution to the war in Ukraine.
Recall
European stock markets on February 24 German stocks rose as investors welcomed the German election results, which allowed centrist parties to form a coalition. Germany's benchmark index was up 0.4%. Shares of defense companies Hensoldt, Rheinmetall and Renk were up between 1% and 2.8%, the euro rose to a one-month high of $1.0528 before settling 0.22% higher at $1.0481 in last trade.
According to the results of counting 100% of the votes, the CDU/CSU bloc received 28.6% in the elections to the Bundestag. Alternative for Germany came in second with 20.8%, and the SPD was third with 16.4%.