Friedrich Merz's Fiscal Revolution: Redefining Germany's Economic Future

German Chancellor-in-waiting Friedrich Merz has secured the Greens' support for a €500 billion fund to revitalize infrastructure and overhaul borrowing rules. The plan aims to strengthen defense and spur economic growth, requiring constitutional amendments. The package also channels significant funds towards climate initiatives and economic transformation.

In a significant political maneuver, German Chancellor-in-waiting Friedrich Merz announced Friday he has gained the crucial backing of the Greens for a historic €500 billion economic revival fund. This move paves the way for constitutional changes, signaling a seismic shift in Germany's fiscal policy.

The fund, proposed by Merz's conservatives and the Social Democrats, focuses on infrastructure enhancements and revises borrowing rules to enhance defense capabilities and spur growth. With the Greens' support, the proposal is likely to secure the two-thirds majority needed to pass constitutional amendments, challenging Germany's long-standing fiscal conservatism.

The plan's swift progression has already influenced financial markets, boosting euro zone bond yields, stocks, and the euro itself. Merz's critics, however, argue his rapid fiscal policy shift contrasts campaign promises, raising concerns of voter betrayal. The success of this ambitious economic agenda now hinges on avoiding defections in parliament.

(With inputs from agencies.)