German politics: Parliament debates debt brake reform – DW – 03/13/2025

Germany's outgoing parliament convenes in a special session to discuss reforming the country's debt brake. The move would allow Germany to spend heavily on defense and infrastructure. DW has more.

Here is a round-up of the main developments around the debt brake debate and efforts to form a new government on Thursday, March 13.

The center-left Social Democratic Party (SPD) and the center-right Christian Democratic Union and Christian Social Union (CDU/CSU) — currently trying to form the new German government — want to take out unprecedented amounts of new debt.

To do this, they have to change Basic Law, Germany's constitution, which can only be achieved with the approval of two-thirds of the members of the Bundestag, Germany's lower house of parliament.

Together with the Greens, the SPD and CDU/CSU could pass the constitutional changes in the outgoing Bundestag.

Whether this will happen remains to be seen. The Greens are still part of the caretaker government but are already preparing for their future role in the opposition after their defeat in the February elections.

The Greens have said they are not inclined to help their political opponents without anything in return. Especially as the CDU/CSU and their candidate for chancellor, Friedrich Merz, had categorically ruled out a reform of the debt brake, while the Greens, SPD and the Left Party have long been demanding just that.

Read more here: Germany's likely new government makes a risky gambit

The Green Party will not support CDU leader Friedrich Merz's proposals for sweeping debt reforms and current talks do not give cause for optimism about a compromise, senior Greens official Katharina Dröge told reporters.

In the talks with the CDU/CSU and the SPD, there is no rapprochement that would allow a timely agreement to be promised, Dröge said.

She once again criticized the fact that no money had been earmarked for climate protection in the extra pot for infrastructure.

"Climate protection is the great challenge of our time," Dröge said. "Here, too, we have not yet seen sufficient willingness to act together."

As Germany's lower house of parliament prepares to debate debt reform, questions are being raised about whether the outgoing Bundestag has the authority to make such decisions.

The Left Party and the far-right Alternative for Germany (AfD) have filed lawsuits with the Constitutional Court to block the special sessions this week and next. They argue that such moves are a violation of the rights of the new members of parliament.

Following elections on February 23, which saw the conservatives come out on top, the old Bundestag continues its work until the new parliament convenes for the first time on March 25.

The debt reform requires a two-thirds majority to change Germany's constitution. But electoral gains by the AfD and The Left last month mean it could be much harder to win support once newly elected lawmakers take their seats.

Instead, the CDU/CSU, led by Friedrich Merz, and the SPD are hoping to push the plan through the outgoing parliament with the help of the Greens. Until the new Bundestag convenes, the old parliament is considered to have a quorum and the authority to make decisions.

There has been no progress in talks to massively increase Germany's government borrowing by reforming the country's debt limits, a Green Party official told RTL/ntv after further negotiations with the conservative CDU/CSU alliance.

Britta Hasselmann warned of "serious gaps and mistakes in the conception" of the plans of CDU leader Friedrich Merz and his likely coalition partners, the Social Democrats (SPD).

Changing the debt rules requires a constitutional amendment, which requires a two-thirds majority in the Bundestag, Germany's lower house of parliament.

For that, the conservatives and Social Democrats need the support of the Greens, who have so far refused to back the whole package.

In addition to raising the debt ceiling, the deal proposed by the CDU/CSU and SPD would create a new €500 billion ($544 billion) special fund for infrastructure investment to be spent over the next decade. The states would get €100 billion of that.

The financial package is not a done deal, however, as Merz's conservatives and likely future coalition partners, the center-left Social Democrats, need to win over the Greens to secure the two-thirds majority needed to change the constitution.

But on Wednesday, outgoing Vice Chancellor Robert Habeck of the Greens denounced the infrastructure fund as a farce masking a collection of CDU/CSU and SPD tax giveaways and election promises.

Germany's conservative conservative alliance of the Christian Democrats (CDU) and their Bavarian sister party, the Christian Social Union (CSU), is set to begin coalition talks with the center-left Social Democrats (SPD) of outgoing Chancellor Olaf Scholz.

Following its victory in February's parliamentary elections, the conservative bloc led by Friedrich Merz has agreed on a number of key points in exploratory talks with the SPD.

Now, 16 working groups, each consisting of 16 representatives of the CDU, CSU and SPD, will spend 10 days negotiating the details of a joint government program. Their work would then be handed over to a negotiating group that would include the leaders of each party.

A draft coalition agreement would then be submitted to the three parties for approval. The SPD has already said it wants to consult its members on a draft agreement. Merz, who is likely to be the next chancellor, has said he plans to have the new government in place by Easter in mid-April.

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In Germany, the federal government and the 16 states are obliged to balance their books and are practically prohibited from taking out extra loans. No other G7 country has such strict limits on new borrowing.

The rules are enshrined in the Basic Law, Germany's constitution, and apply — with minor differences — both at the federal level and in the 16 states, or "Länder" in German.

The requirement was introduced during the 2009 global financial crisis. The debt brake became legally binding for the federal government in 2016 and for the states in 2020.

However, the debt brake is not absolute, at least not for the federal government. While an outright ban on debt applies to the federal states, the federal government is permitted net borrowing amounting to a maximum of 0.35% of economic output.

The Basic Law also allows the debt brake to be suspended "for natural disasters or unusual emergencies beyond governmental control and substantially harmful to the state's financial capacity."

Read more here: What is Germany's debt brake?

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The lower chamber of Germany's outgoing parliament, the Bundestag, will convene in a special session to discuss reforming the country's constitutionally enshrined government borrowing limits, known as the "debt brake."

Reform would ease the 2008 global financial crisis-imposed measures, seen by many as an outdated financial stranglehold. The move would allow Germany to spend heavily on defense and infrastructure.

The reform is being pushed by the conservative CDU/CSU bloc, led by incoming Chancellor Friedrich Merz, and the Social Democrats, who are in preliminary talks to form a coalition after the February elections.

However, the move is controversial as some parties, including the far-right AfD, have accused the major political parties of pushing through new legislation before the newly elected parliament convenes.

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