Germany will go into huge debt to rebuild its infrastructure and strengthen its military. And for Friedrich Mertz to become chancellor
Friedrich Mertz, a millionaire, former employee of the investment fund BlackRock, which turns over billions, has now stepped into a new order of magnitude. In the trillions.
The leader of the German Christian Democrats has not yet entered the Chancellor's office, but he is already making far-reaching moves in the chancellery.
With the Social Democrats, he finalized a special budget of 500 billion euros for infrastructure for the next ten years. And also that expenditures for the army that exceed one percent of GDP should also be paid with special funds.
Those "special funds" are not falling from the sky - Germany will have to borrow. There will also be a small political circus, never seen before.
Hurry up, hurry up.
In the era of Christian Democrat Angela Merkel, a "borrowing brake" was written into the German Constitution, that is, the German state budget must be at positive zero and the country must not borrow.
Mertz also stuck to that fetish, promising in the campaign that there must be no new debts. But now he has turned the tables.
The constitution can only be changed by a two-thirds majority in the parliament. On February 23, the electoral will of the citizens wanted the Christian Democrats and the Social Democrats to have only a slim majority - 328 out of 630 mandates.
Even if they were joined in the vote by the Greens with another 85 mandates, they would be short of a two-thirds majority.
It will be difficult for the right-wing Alternative for Germany (152 MPs) and the Left (64) to support such borrowing.
Hence the urgency - the old composition of the Bundestag is still together with a different division of forces, so it is necessary to push through what the new one will not be able to do.
This has already caused criticism that the Christian Democrats and the Social Democrats are bypassing the will of the citizens who voted as they did, but these two parties use an even older, more favorable composition of the Bundestag for such far-reaching decisions.
There's money for everything.
It seems that Mertz stepped up to win over the Social Democrats for the coalition. After a historically bad result in the elections, they do not want to agree to cuts in social benefits and pensions.
Merc, on the other hand, does not want to agree to further burdening the economy with taxes or to higher taxes for the rich.
In translation - there is no money for everything in the budget, especially when you know the desperate state of German roads, bridges, railways, and digital infrastructure. 500 billion euros are now going into all this.
The urgency was also caused by the moves of US President Donald Trump, who is said to have withdrawn the US security guarantee for Europe and entered into a deal with Vladimir Putin while completely ignoring Ukraine and Europe.
Suddenly, the Germans realized that they needed a far more equipped and modern army.
"Given the threats to our freedom and peace on the continent, the catchphrase must apply when it comes to defense - whatever it takes", said Mertz. What it costs costs.
Hope for economic recovery
And it costs a lot. The calculation says that all payments for the army that exceed 44 billion euros per year will now be financed from a special budget, therefore also through borrowing.
If the budget of the Bundeswehr goes to some 90 or 100 billion euros per year, then that too will cost about 500 billion euros in ten years. With those 500 billion for infrastructure - a whole trillion.
Liberal economists criticize that future generations will have to pay for all of this, leftists criticize militarization, rightists relish Mertz for breaking the promises he made just a few weeks ago in the campaign.
Then again, even that trillion euros should be compared with the German GDP, which last year - the third year of the recession - amounted to 4,3 trillion euros.
This is Mertz's greatest hope, that massive investments in infrastructure and the army will jump-start the German economy after years of stagnation or decline. And then it will be easier to pay off the loans.
Economic recovery is uncertain. Tariff wars with Trump's United States threaten, especially the automotive industry, which is the engine of German exports.
How to get a new government?
Mertz, who had previously ruled out cooperation with Alternative for Germany, had little choice but to negotiate with the Social Democrats.
With those, therefore, whom he criticized the most during the campaign. It is a relief that Olaf Scholz, the outgoing chancellor with the worst approval rating in history, is not in those talks. He will soon be a political pensioner.
Since borrowing will probably make money for everyone - at least in the next two election cycles - the Christian Democrats and the Social Democrats have to agree on a plan to combat illegal migration, which was the main theme of the campaign. The former are harder, the latter somewhat softer.
Mertz previously announced that the Government will be formed by Easter. The only landmine is the intra-party referendum among the Social Democrats. There, the membership has to vote on possible entry into the coalition.
When Mertz finally takes his seat in the Chancellor's office, he will have another big task - to prevent the further strengthening of the Alternative for Germany, which doubled its result from the previous election. Every fifth citizen now votes for them.
If Merz's government does not improve living standards and provide citizens with a sense of security, many believe that in 2029, there will no longer be a government without extreme right-wingers.
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