Germany Embarks on Massive Fiscal Reform Push: What to Watch

Germany plans to unleash hundreds of billions of euros in debt-backed financing for defense and infrastructure investments in a historic shift to overhaul its notoriously tight limits on government borrowing.

Friedrich Merz, who will likely be the next chancellor, announced late Tuesday that Europe’s biggest economy would amend the constitution to exempt defense and security outlays from limits on fiscal spending to do “whatever it takes” to defend the country. This will allow Berlin to allot essentially unlimited amounts of money to bolster its military.