Germany set for trillion-euro defense and infrastructure splurge

Subscribe to enjoy similar stories. BERLIN—Germany’s mammoth spending package cleared its last parliamentary hurdle, paving the way for as much as €1 trillion in civilian and defense investments to jolt the region’s economy and reduce its military reliance on the U.S.

But economists and defense experts have warned that for Germany and Europe to reap the full benefits, the wall of money would need to be flanked with ambitious—and not necessarily popular—structural overhauls, including tax, bureaucracy and labor-market reforms. Germany’s spending plan, equivalent to around $1.08 trillion, has drawn cheers across a continent unnerved by signs that the U.S.

is downgrading its security commitment to Europe and seeking a rapprochement with President Vladimir Putin’s Russia, which is seen as the region’s biggest threat. “Berlin is breaking the piggy bank, and it’s doing it even before the next government is in office," said François Heisbourg, a Paris-based expert on strategy and defense who has advised the French president.

“Germany is giving itself the means to become a military force to match its economic and strategic weight. That’s a sea change." Friedrich Merz, winner of last month’s German election and the man in line to become chancellor, has pledged to focus on European cooperation after the departing government became increasingly distracted by internal frictions between the coalition’s three parties.

The German spending plan he developed marks a U-turn for Berlin, which for years preached fiscal discipline to its European neighbors while letting its military atrophy for lack of investment. The package’s scale dwarfs a €158 billion defense fund floated by the European Commission this month to support military spending