Update: As of March 21, the upper house of the German parliament (Bundesrat) has now also passed Friedrich's Merz's finance plan.
Members of the German parliament’s lower house (Bundestag) have voted to relax the county’s historic debt brake law. Why is the vote so significant, and what happens next?
Members of the Bundestag have voted to pass Friedrich Merz’s multi-billion-euro finance plan. 720 of the Bundestag’s current 733 members voted, 513 MPs voted to pass the bill, 207 voted against it, and none abstained.
The vote was tight, with chancellor-in-waiting Merz (Christian Democratic Union) needing at least 489 votes in favour of his plan for it to pass.
Since the CDU / CSU won the federal election on February 23, the party has been making moves to form a coalition with the Social Democratic Party (SPD). In early March, the two parties published an 11-page “exploratory paper” that outlined what their coalition would do while in government and the finance plan which was today approved in the Bundestag.
The finance plan covers many areas, from increasing the minimum wage to “purchase incentives” for buying electric cars and reducing VAT from 19 percent to 7 percent on restaurant and cafe purchases.
But the CDU-SPD's plans to relax Germany’s debt brake (Schuldenbremse), increase defence spending, and create a special, 500-billion-euro infrastructure fund are considered the boldest parts of the plan.
The Schuldenbremse was introduced shortly after the 2008 financial crisis and rules that Germany’s annual debt cannot be more than 0,35 percent of its annual GDP. When it was adopted, the Schuldenbremse was written into the German constitution (Basic Law or Grundgesetz).
However, the Schuldenbremse has become more of a burden than a help in recent years, as Germany manages multiple crises such as coronavirus and Russia’s full-scale invasion of Ukraine. Merz argues that German defence spending must be exempt from the debt brake laws so that the country can increase security in uncertain times.
Making these changes is no cakewalk, since the Schuldenbremse is enshrined in the Grundgesetz and any Bundestag vote to change to Grundgesetz needs at least a two-thirds majority. The incoming parliament is due to convene on March 25, but Merz was eager to push his finance plan through beforehand, believing that it could only pass in the outgoing parliament.
In the outgoing parliament, the CDU / CSU, SPD and Greens hold the two-thirds majority Merz needed to get his plan through, but the leader first had to spend last week talking round the Greens to ensure he could count on their vote.
The left-leaning, environmentalist party played hardball, and as a result, a reformed version of Merz’s financial plan now includes a 100-billion-euro investment in climate policies.
"[The Greens] managed to achieve more over the past week as they faced their last days in government [...] than in the last three-and-a-half years when they were in charge,” Deutsche Welle’s political editor Michaela Kuefner suggested.
Unsurprisingly, Merz’s hurry to push through a change to the constitution has also been met with criticism. Speaking in the pre-vote Bundestag debate on Tuesday, Johannes Vogel of the Free Democratic Party (FDP) called the move a “dramatic reckless gamble”.
Britta Hasselamnn (Greens) also accused the CDU of opportunism, having u-turned on financial promises made in their manifesto. "In October 2024 [...] [e]veryone knew that this country urgently needed investment. The Greens and the SPD had campaigned together for this," Hasselmann said, claiming that the centre-right party had instead denied investment was necessary and defamed the coalition.
So, what comes next in the democratic process? Following the Bundestag vote, Merz’s financial plan faces further hurdles before it can be officially adopted. On Friday (March 21), members of Germany’s upper parliamentary chamber (Bundesrat), which represents governments of the 16 federal states, will vote on the plan. Only with their approval can it go ahead.
The plan needs at least 46 of 69 votes to pass in the Bundesrat, but state governments run exclusively by the CDU, SPD, or Greens only have 41 votes to cast, meaning five votes in favour of the plan must come from representatives of other parties.
All eyes will be on Bavaria on Friday. If Bundesrat representatives from the Christian Social Union (CSU) and Freie Wähler (Free Voters) parties in the southern federal state stick to their word, they will use their six votes to pass the financial plan.
Even with this success, yet another hurdle remains in the near future. Once Germany’s incoming parliament convenes on March 25, 2025, Merz’s plans could be halted by a “blocking minority” if the far-right Alternative for Germany (AfD) and far-left Left Party (die Linke) vote to block the change.
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