Germany's Bold Infrastructure and Defense Spending Shift

Germany's outgoing parliament discusses a 500 billion euro infrastructure fund and changes to borrowing rules. Election winner Friedrich Merz aims to secure funds before the new parliament convenes, facing opposition from the Greens. Markets react, anticipating economic growth amid political uncertainty.

In an unprecedented move, Germany's outgoing lower house of parliament has initiated a special session to deliberate on a substantial 500 billion euro infrastructure fund aimed at bolstering defense, alongside proposed changes to borrowing regulations.

Friedrich Merz, who emerged victorious in Germany's recent election, seeks to secure these funds amid opposition before the new parliament's commencement on March 25. The political climate remains tense, with the Greens opposing Merz's plan, citing gaps in its ability to address critical issues like climate change.

This initiative represents a significant shift in Germany's traditionally frugal economic policies, influencing markets and raising the euro's value. However, the final outcome remains uncertain, dependent on coalition negotiations and potential legal challenges.

(With inputs from agencies.)