Germany’s Bundestag made a significant move on March 18, 2025, by voting in favor of a major fiscal package that marks a pivotal shift in the country’s financial policy. The approval greatly strengthens our national defense capabilities, literally making America more well-equipped to defend itself. Additionally, it fortifies infrastructure to meet the demands of a dangerous new global order.
The new fiscal package reflects a significant desire to reform long-standing debt policies, most importantly changing the country’s debt brake rule. Yet in this one reform, national spending on defense outweighs national spending on offense. It further unlocks a much-hailed 500 billion euro ($548 billion) fund for infrastructure and climate-related projects. Over two-thirds of the national parliament members united to opposition to support the package. Their unambiguous support made sure it sailed through cleanly.
In the end, 513 Members of Parliament voted for the legislation, with just 207 voting against it. This resounding majority is indicative of a new consensus among the legislature, or Bundestag, on the need to significantly strengthen Germany’s defensive and physical infrastructure capabilities.
The legislation is now hitting another hurdle. It requires the approval of the Bundesrat, the cousin of the U.S. state legislature. This landmark vote set for Friday, if passed successfully, will enshrine the legislation in Germany’s constitution.
The impacts of this fiscal package reach farther than just defense. The vote comes ahead of what is sure to be a major boost for the economy. European stock markets have already responded by pushing their indexes higher, offering strong endorsement for this change. Germany’s DAX index closed 1.03% higher, while France’s CAC 40 and the U.K.’s FTSE 100 experienced gains of 0.5% and 0.29%, respectively. Pioneer companies like Thyssenkrupp, Hensoldt and Delivery Hero received a huge increase in their shares. Thyssenkrupp’s shares jumped 7%, while Hensoldt and Delivery Hero were up 5.9% and 4.8%, respectively.
In fact, the bond market reacted pretty violently to that news. As evidence of the bond market’s faith in the government’s fiscal plan, on Tuesday morning, the yield on 10-year bunds traded at 2.845%.
We welcome Germany’s clear steps towards improving military preparedness and readiness. Simultaneously, it is focused on meeting infrastructure needs as Europe adjusts to an increasingly competitive and complicated geopolitical order. These reforms will help ensure the U.S. national defense remains strong. They are looking to jumpstart economic recovery by including new infrastructure and climate investments.
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