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The Early Reichstag building in the morning.
Paul Zinken/DPA | Image Alliance | Getty images
The Germany Bundestag will vote in an important fiscal package later on Tuesday, which includes changes in long -standing debt policies to allow a higher defense expense and a climate fund with infrastructure and infrastructure of 500 billion euros ($ 548 billion).
More than two thirds of Parliament must support the package to approve and enshrine in the Constitution of Germany. The law must also be approved by the Bundesrat, an agency that represents the states of the country, on Friday.
According to the new proposed laws, the defense and certain security expenses above a certain threshold would no longer be subject to the debt brake, which limits how much debt the government can assume and dictates the size of the structural budget deficit of the federal government.
Loans assumed as part of the Infrastructure Fund would also be exempt from the debt brake, while Germany’s states would also have greater flexibility around debt.
The Christian Democratic Union, together with its Sister party, the Christian Social Union, which jointly won most of the votes in the national elections of Germany in February, proposed the fiscal change in collaboration with the Social Democratic Party. The factions are likely to form the incoming coalition government, with the tax reform package as a byproduct of conversations about a possible government association between them.
A tight vote
The time pressure to approve the reforms is high, since they require changes in the Constitution, which means that it must obtain the support of two thirds of Parliament and the Bundesrat. It is likely that this is only possible before the new Parliament, which was chosen in February, joins for the first time next week, since the parties that oppose the fiscal package will have a majority of the vote and could block the plans.
Several of the parties that oppose the reforms have also launched without success legal challenges to hinder the vote.
In the period prior to the vote on Tuesday, the CDU-CSU and the SPD also had to negotiate the support of the Green Party of Germany, which finally agreed to a commitment which includes 100 billion euros of the infrastructure fund that is assigned to the efforts of climate and economic transformation and an extension of the problems related to the exempt security of the debt brake.
If all members of the Parliament that are part of CDU-CSU, SPD and Green Party would support the package, there would be a 31 votes to achieve the two-thirds majority necessary for the Bundestag to approve the reform.
An impulse to the economy?
Analysts and economists generally reacted positively to the initial announcement of the plans earlier this month, seeing them as a potentially important impulse for the economy in difficulties in Germany.
The German economy bordered by little a technical recession, which is defined by two consecutive quarters of economic contraction, during 2023 and 2024, but has been effectively stagnant.
He OECD On Monday he was now projecting that Germany’s Gross Domestic Product grew by 0.4% per year, below the previously forecast expansion of 0.7%. German Economic Institute IFO Meanwhile, he said he was reducing his perspective for the country’s economy to a growth of 0.2% year after year.
It occurs when Germany faces sustained infrastructure problems, as well as problems in key industries such as housing construction and cars. The country is also fighting the threat of possible tariffs imposed by the president of the United States, Donald Trump, in imports to the United States from Europe, which could be especially difficult for Germany due to its high levels of trade with the United States.
