Germany's Coalition Plans Big Spending Overhaul

Germany's prospective government coalition discussing plans to loosen debt rules for increased defense spending. Plans include a 500 billion Euro fund for infrastructure investments over a decade. Centre-right leader Friedrich Merz and the Social Democrats aim to exempt defense spending from borrowing limits, exceeding 1% of GDP.

Germany's potential next government coalition is aiming to revise national debt regulations to permit increased defense expenditure. This move is part of a broader strategy to boost fiscal flexibility.

Central to this financial overhaul is a proposed 500 billion Euro fund, designed to upgrade Germany's infrastructure in the coming decade. This initiative underscores the coalition's commitment to large-scale economic investments.

Friedrich Merz, the centre-right election victor, is in negotiations with the centre-left Social Democrats led by Chancellor Olaf Scholz. They plan to advocate for the exclusion of defense allocations exceeding 1% of GDP from current borrowing restrictions, signaling a shift in fiscal policy.

(With inputs from agencies.)