In Germany, fiscal reform package loosening constitutional restrictions passes lower house of parliament

Germany's Bundestag on Tuesday approved a landmark fiscal reform package, clearing the way for €500 billion ($548 billion) in defense and infrastructure investments while loosening the country's constitutionally mandated debt limits. The vote passed with 513 members in favor and 207 against, exceeding the two-thirds majority required to amend the German constitution. The reforms mark one of the largest fiscal policy shifts in postwar Germany, altering long-standing debt rules to allow increased military and security spending, alongside significant investments in climate projects and economic modernization. The legislation now heads to the Bundesrat, Germany's upper house, for final approval on Friday. Under the new framework, defense and security expenditures above a certain threshold will be exempt from Germany's debt brake-a fiscal constraint introduced after the 2008 financial crisis to cap the federal government's structural deficit. Loans funding the infrastructure and climate transformation initiatives will also fall outside debt restrictions. Additionally, individual German states will gain greater flexibility in managing their debt levels.
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