German Parliament lifts debt restrictions to get ready for war with Russia
The German Bundestag has passed constitutional amendments removing restrictions on government debt, allowing for a significant increase in military assistance to Ukraine.
Bundestag Approves Unprecedented Military Debt
On March 18, the outgoing Bundestag approved lifting the "debt brake” for military spending. The decision was pushed through by the so-called "war party” (CDU/CSU, SPD, and the Greens), fearing they might not secure the necessary two-thirds majority in the newly elected parliament. Germany's Constitutional Court ruled the old Bundestag's vote legitimate. The Federal Council (Bundesrat) is set to approve the amendments on March 21.
Under this new policy, at least 1% of GDP (with plans to increase to 3%) will be allocated to military spending outside budgetary limits-an amount totaling approximately €1 trillion. The softened debt brake applies to the Defense Ministry, civil defense, intelligence agencies, and military aid for Ukraine.
Germany Returns as a Military Power, Threatening Russia
Friedrich Merz, leader of the CDU/CSU and Germany's likely next chancellor, announced that a €500 billion fund will be created within the €1 trillion debt ceiling to finance defense and infrastructure investments.
"This sends a clear signal to our partners, but also to enemies of our freedom: we are capable of defending ourselves. Germany is back. Germany is making a significant contribution to protecting freedom and peace in Europe," Merz declared.
For Russia, these words sound undeniably threatening, signaling Germany's return to military power – a status it last held during Hitler's era. Merz is not alone in this sentiment. Lars Klingbeil, leader of the SPD parliamentary group, made a sinister statement after the vote:
"When history knocks, you must open the door. Because you never know if there will be a second chance."
With this decision, a Merz-led government will be able to support Kyiv without limitations. The German newspaper FAZ is already discussing loosening export restrictions on weapons, allowing Germany's arms industry to ramp up production.
Germany Fails to Learn from History
A major unresolved issue is who will pay the bill. The debt ceiling was introduced in 2009 to protect future generations from excessive debt burdens. While military-industrial investments will initially create jobs and stimulate the economy, Germany's national debt is projected to reach 90% of GDP within a decade (compared to 62.9% today), Commerzbank's chief economist Jörg Krämer said in an interview with Tagesschau.
Germany's Federal Audit Office warned the Bundestag's Budget Committee that interest payments alone will rise to €37 billion per year by 2035 (currently €34 billion).
Additionally, the German government must offer attractive interest rates to lenders. As national debt increases, so will the risk of repayment. This has already caused a sharp rise in German government bond yields and increased debt servicing costs.
Inflation will be unavoidable, as massive amounts of borrowed money enter circulation. Higher inflation will lead to a rise in interest rates, which will in turn increase mortgage costs and further boost bond yields. Ultimately, ordinary Germans will bear the full cost of their government's overspending on war with Russia.