Under the weight of shifting global alliances and economic uncertainty, Germany has struck a landmark agreement that could redefine its fiscal future, sources familiar with the discussions revealed (via Reuters).
According to these sources, Chancellor-in-waiting Friedrich Merz secured a deal with the Greens to significantly increase state borrowing, unlocking a 500-billion-euro fund aimed at modernising infrastructure and strengthening defence.
The compromise, which includes 100 billion euros for climate and economic transformation, represents a dramatic shift in Germany's traditionally conservative fiscal approach, challenging long-held principles of debt restraint.
Financial markets responded swiftly, with the euro and government bonds rising on expectations of broader economic stimulus. While the agreement clears a major political hurdle, securing parliamentary approval remains the next critical step.