Federal Council: Departure package decided – how things are going on now

The historical package with billions of billions for defense, infrastructure and climate protection has overcome the last major hurdle in the Federal Council. The countries agreed with a large majority, there were even significantly more than the necessary two thirds of the votes. Now the package has been decided.

This should be relieved by the probably next Chancellor Friedrich Merz (CDU) and the coalition negotiators of the Union and SPD-because these billions should form the basis for their black and red federal government.

What has been changed?

It was about three articles of the Basic Law. Germany can now theoretically invest a lot of money in defense, civil protection, intelligence services and cyber security. The debt brake only applies to part of these expenses, everything can also be financed by loans.

In addition, a special pot of the debt brake is fed up to 500 billion euros. The repair of the dilapidated infrastructure – i.e. bridges, energy networks, streets or schools – is to be paid from this. 100 billion euros are to be used for climate protection and the climate -friendly conversion of the economy.

However, the money may only flow if an appropriate investment rate applies in the normal core budget. This is intended to prevent the Union and SPD from finishing election gifts on detours.

The countries also agreed because they benefit significantly from the package: Not only do they get 100 of the 500 billion euros for infrastructure and climate protection. In the future, they can accommodate debts of 0.35 percent of gross domestic product – this would be around 15 billion euros this year. So far, a debt limit of zero has been valid for the countries.

When are the changes in force?

Now the only thing missing is the copy of the law by Federal President Frank-Walter Steinmeier. The Federal President must check whether the constitutional change has been concluded in accordance with the regulations of the constitution.

According to reporters, the lawyers have already started in the Federal President’s Office. Steinmeier should make it easier for the Federal Constitutional Court to have the proceedings before the vote in the Bundestag is legally made to send its signature under the law.

In some countries, the constitution must also be changed to relax the debt brake-only in North Rhine-Westphalia, Berlin, Thuringia and in Saarland there is no debt brake in the state constitution.

How many debts will be started this year?

That is not yet clear. In its budget for 2025, the traffic light government planned defense spending of 53 billion euros. According to the new rules, only around 44 billion would have to be counted towards the debt brake, and the nine billion could be financed through loans.

The relaxation for expenses in the areas of civil protection, cyber defense, intelligence services and help for states that are contrary to international law increases the scope. Tobias Hentze from the Institute of German Economy (IW) calls a further 13 billion euros in a calculation available to the “Handelsblatt”.

It does not have to stay, because on the basis of the property, there is no longer any limitation of expenses in these areas. The new federal government could also decide to finance the citizens’ allowance for refugees from Ukraine through loans. Or to increase the defense budget significantly. Defense Minister Boris Pistorius (SPD) said in November that the Bundeswehr needed around 58 billion euros to quickly close capacity gaps.

Does that mean unlimited possibilities?

No, but a limited factor will probably be less the money in the future. It will be more about the capacities of industry and in the case of the special infrastructure pot about the availability of craftsmen and raw materials as well as the planning capacity in authorities. The amount of the new debts will therefore depend on what can be commissioned so quickly.

In the case of defense expenditure, the principle applies: Payment is only made when delivery – and that is how you have to go.

Who decides what how much money is spent for?

Pistorius emphasized that this was not solely with the federal government. In the end, the parliament decides on the budget and thus also about the amount of defense spending. For the special fund, a so -called economic plan still has to be set up, which regulates which projects are financed. A proposal comes from the responsible ministries, but the last word also has the Bundestag.

There should still be a lot of struggle for details. Example climate protection: Some politicians and federal states include measures for climate adjustment such as better flood protection. Others argue, so they take care of the consequences of climate change, but do not fight it.

A further law still has to be regulated how the new debt options of the countries between the individual federal states are distributed.

When will the debts be repaid?

This is also not yet regulated. A repayment plan must be drawn up for the special infrastructure. It is uncertain whether the defense loans possible by loosening the debt brake will ever be repaid. Because the fact that a state is indebted is not problematic per se – provided it is considered creditworthy. The expected economic output is particularly relevant to this, but also a stable democracy, for example.

The debts are usually considered in relation to economic output. Since the economy is growing in the long -term view with a few exceptional years, the debt mountain is becoming smaller and smaller. However, annual interest payments can be painful.

What influence does the package have on the coalition negotiations?

Anyone who believes that all the money problems of a new federal government have been solved. The billions are urgently needed, but a huge gap in the household is still likely to die. Because the CDU, CSU and SPD have decided some expensive projects, such as the expansion of the mother’s pension, raising the commuter flat rate and a tax cut for the catering trade.

You can only use the money from the infrastructure pot if at the same time invests appropriately in the normal household. Merz has therefore already announced that it has to be saved elsewhere. Accordingly, the conversations in many groups who work on the coalition agreement are also heard tough.