German MPs approve fiscal 'bazooka' for defence, infrastructure

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00:00As we've been mentioning, Germany's parliament has given the green light to a move aimed

00:04at loosening the government's borrowing limits to funnel billions of euros into defence.

00:09The plan piloted by incoming chancellor Friedrich Merz passed narrowly in the Bundestag today

00:14with 513 lawmakers saying yes, that's two dozen more than the two-thirds majority needed.

00:21All the votes means the country will be lifting its foot off its debt break enshrined in the

00:26constitution which limits its yearly borrowing to just over 0.35% of the country's GDP.

00:35Let's speak to Nick Holdsworth, France 24's correspondent in Berlin.

00:39Nick, just lay out for us what exactly the lawmakers agreed to.

00:45They've agreed to a combined package, indeed around 5 billion euros for defence, for the

00:52rearmament that Europe must undergo now in the face of Russian aggression on its eastern

00:59borders and the lack of American support in the last couple of months since Trump was

01:08inaugurated as 47th president in the USA.

01:13The package is a little bit wider than that, there's 500 billion also for infrastructure

01:18projects, 100 billion of which will be for combating climate change and for economic

01:24reforms.

01:25That was the cost of the support of the Green Party in this vote and it has indeed been

01:33quite a controversial measure.

01:34Some people welcoming this influx of money through borrowing that will come into the

01:40German economy and others saying this is a dangerous experiment with Germany's long-standing

01:47tradition of keeping debts within a very small limit of total GDP.

01:52The move was condemned by the AfD, the Alternative for Deutschland, the far right-wing party,

01:59with its leader Alice Weidel walking out in disgust with a very obvious look of disgust

02:05on her face from that debate today.

02:07And the importance of this debate and this vote today was that it was getting these difficult

02:13measures through in the current parliament where Friedrich Merz could muster the required

02:19two-thirds majority because that won't be the same in the next parliament which convenes

02:24in just a week's time.

02:25It's going to be a smaller parliament, about 100 seats smaller, so about 630 seats versus

02:30today's 736, and the majority won't be there because the large number of people who voted

02:38for the AfD, that will be the second-place party, quite a large contingent of the far

02:42left Die Linke party, and it would be virtually impossible to get these measures through

02:47in just one week's time.

02:49The measures do need to be ratified by the Bundesrat on Friday, that's the upper house,

02:55and that's likely to go ahead without any further controversy.

02:59Well Nick, we have been hearing some reaction.

03:01We've had President Macron speaking just a little earlier describing the vote as good

03:06news.

03:07Talk to us about the other bits of reaction that have been coming in.

03:10There's been a very positive reaction for the markets.

03:15Indeed before today's vote, the German stock exchanges had come up a little bit after some

03:22of the battering that stock markets around the world have had since President Trump started

03:27his trade war a few weeks ago, and indeed the euro is at a five-month high today, so

03:33clearly the markets see this as good news.

03:35The German economy has been in recession for the last couple of years, and the influence

03:39of money will basically give a Keynesian boost to the German economy, which should

03:46help assuage some of the fears of people in this country for lifting that debt break.

03:52Some of the commentators have been saying, well the debt break might have made sense

03:54in 2008 when Angela Merkel instituted it in the face of the then economic downfall across

04:03the world, but in today's fast-moving economic and fast-moving geopolitical situation, having

04:09such a curb on government borrowing does not make sense.

04:13So it's likely, if the markets are right, that Merz will find himself a winner on something

04:18which was a very controversial vote for Germany.

04:21Nick, thank you so much for bringing us up to speed there.

04:25Nick Holdsworth reporting live from Berlin.

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