In Germany, the approval of a 500 billion euro spending plan is expected in the lower house of parliament today. The bill will transfer hundreds of billions of euros into the economy. The lower house of parliament in Germany, the largest economy in Europe, will vote today on a massive borrowing package and constitutional change to revive the economy and increase military spending. Friedrich Merz, expected to be the next chancellor of the newly formed government, reached an agreement with the Green Party on Friday and objections to this plan were rejected by Germany’s Constitutional Court yesterday. If the borrowing package and constitutional change are approved in today’s vote, the upper house of parliament is expected to endorse it on Friday. INFRASTRUCTURE FUND Approximately 100 billion euros out of the proposed 500 billion euro infrastructure fund, to be spent over a period of 12 years, will be allocated for climate and economic transformation as requested by the Green Party. The remaining 300 billion euros will be allocated to federal infrastructure investments, with 100 billion euros going to state government projects. FINANCIAL SPACE FOR STATES In addition to the 100 billion euros in the infrastructure fund, each of the 16 federal states in Germany will be allowed to run a structural deficit of up to 0.35% of their economic output, like the federal government, providing an additional 16 billion euros in spending opportunities. States are currently not allowed to borrow under existing laws in Germany. DEFENSE SPENDING With the amendment to the “debt brake” that constitutionally prevents public borrowing from exceeding 0.35% of the Gross Domestic Product (GDP), exemptions will be granted to allow defense spending to exceed 1% of the GDP. This definition of defense spending also includes civil security, intelligence, and assistance to countries under illegitimate attack. SUPPORT TO UKRAINE Approval of the 3 billion euros in military aid that Germany will provide to Ukraine against Russian aggression is expected to be voted on next week.