Race against time to secure Germany’s €500bn infrastructure package

The CDU and SPD political parties, who hope to form a new government following last month’s election in Germany, announced plans to loosen Germany’s “debt brake” and allow more investment to flow last week.

In addition to allowing more borrowing for defence spending, the special infrastructure fund would see more spending on transportation, energy, education and digitalisation projects.

News of the proposals was welcomed by the major Germany construction associations, including Bauindustrie and the ZDB.

However, the plans require a two thirds majority in the Bundestag. The CDU and SPD have been racing to get the plan approved while Germany’s old parliament is still sitting. When the new parliament is formed on 25 March, it is thought that it will be harder to secure approval for the fund, due to increased representation from Die Linke and Alternative für Deutschland (AfD), who sit on the hard left and right of the political spectrum respectively and are thought to oppose the plans.

However, the Greens announced on Monday that that would not support the package, stating that they would not “finance the election promises of the CDU and SPD through debt”.

Groups from the AfD and Die Linke have also mounted court challenges against a special session in the old parliament to push through the plans.

Commenting on the situation, Carsten Brzeski, global head of macro at Dutch bank ING said, “The risk of failure has increased. It is clear that if the vote in parliament fails, the informal coalition talks of the last few weeks will have been pointless.”

Germany’s outgoing lower house of parliament is set to hold a special session today (13 March) to debate the fund.