Chancellor-in-waiting Friedrich Merz has secured a breakthrough deal with the Greens, paving the way for a massive state borrowing boost. The agreement, crucial for economic growth and defense spending, sent the euro surging as markets reacted to the historic shift in Germany’s fiscal policy.
German Chancellor-in-waiting Friedrich Merz reached an agreement with the Greens on Friday on a massive increase in state borrowing in Europe's largest economy, sources close to the negotiations said, in news that sent the euro soaring.
Merz's conservatives and the Social Democrats, who are in negotiations to form a government after an election last month, had proposed a 500 billion euro fund for infrastructure and sweeping changes to borrowing rules to revive growth and ramp up military spending.
Decades of German fiscal conservatism have been upended by U.S. President Donald Trump's policy shifts, with Merz warning that Russia and U.S. could leave the Europe exposed.
To reach the two thirds majority required for the necessary constitutional changes, though, they need the support of the Greens who had hitherto rejected their plans, worried the new funds might be used simply to finance policies such as tax cuts.
The three parties, however, reached a deal on Friday, two sources close to the talks said, The news sent euro zone government bond yields, shares and the euro currency jumping on expectation the plan would boost the wider European economy.
"There is a deal," the source said after German newspaper network RND had previously reported a compromise. A Greens source said they were happy with the deal.
One source familiar with the talks said the compromise includes the allocation of 100 billion euros for the climate and economic transformation fund.
The revised debt deal is being examined by finance ministry officials, two parliamentary sources said. Another source said some details were still being hammered out.
The parliamentary groups of all three parties were hastily convened to meet at 12:00 GMT to discuss the deal.
A 24-hour strike at key German airports on Monday left over half a million passengers stranded, with over 1,000 flight cancellations, as workers demand higher wages and better conditions.
Berlin’s airport has cancelled all flights for Monday in anticipation of a labour union strike, which is expected to affect over half a million travellers and disrupt thousands of flights at 11 airports across Germany.
Germany’s election winner Friedrich Merz and the SPD have wrapped up preliminary coalition talks, pledging stricter migration controls and economic reforms. Merz aims to finalise the deal by Easter, stressing Europe must strengthen itself amid shifting U.S. policies under Donald Trump.
Germany’s Bundestag will debate major infrastructure spending and defence funding reforms from 13 March, with a vote set for 18 March. Key parties negotiate over debt rule changes and a €500 billion fund.
Germany announced on Tuesday that it is stopping new development aid to Rwanda and reviewing its existing commitments, citing concerns over Rwanda’s role in the conflict in the neighboring Democratic Republic of Congo.
The President of the Democratic Republic of Congo Felix Tshisekedi is considering a sit-down with Rwanda backed armed group M23.
At just 17, Vakhtang Salia is set to swap Dinamo Tbilisi for Newcastle United, marking a major step in his career. The young striker, inspired by Georgian stars like Kvaratskhelia, will move to England in August, hoping to shine in the Premier League and one day represent his national team.
Zara owner Inditex reported a 10% rise in transport emissions in 2024, driven by increased air freight to avoid shipping delays caused by Red Sea disruptions. While the retailer made progress in reducing sourcing-related emissions, it faces challenges in meeting its long-term climate targets.
BMW expects a €1 billion loss for 2025 due to the US-EU tariff dispute, including a 25% duty on certain vehicles and tariffs on its China-made electric cars. The company hopes not all tariffs will remain for the full year.
XPeng Motors plans to mass-produce flying cars by 2026, becoming the first company globally to do so. CEO He Xiaopeng also highlighted advancements in autonomous driving and humanoid robotics as part of the company’s future tech initiatives.
World leaders welcomed the 30-day ceasefire proposal that Ukraine has agreed to, calling it a step toward ending the conflict with Russia.
BioNTech forecasts a revenue decline for 2025, expecting between 1.7 billion and 2.2 billion euros, down from 2.75 billion euros last year. This drop is due to Pfizer write-downs and stable vaccination rates. BioNTech also plans significant job cuts and new hires.
In Tuesday’s closely watched parliamentary election, Greenland’s pro-business opposition Demokraatit party took a commanding lead after over 90% of the ballots were counted.
Regarding the Armenia-Azerbaijan process, we cannot forget the years of occupation, and we will not forget them, President Ilham Aliyev said in his speech at the opening ceremony of the 12th Global Baku Forum.
The President of the Democratic Republic of Congo Felix Tshisekedi is considering a sit-down with Rwanda backed armed group M23.
At just 17, Vakhtang Salia is set to swap Dinamo Tbilisi for Newcastle United, marking a major step in his career. The young striker, inspired by Georgian stars like Kvaratskhelia, will move to England in August, hoping to shine in the Premier League and one day represent his national team.
A 5.6 magnitude earthquake struck Sulawesi, Indonesia, on Friday, sending tremors across the region. Local authorities are now assessing potential damage and preparing for possible aftershocks.
Mark Carney will be sworn in as Canada’s prime minister on Friday, marking a historic rise for the ex-central banker with no prior political experience.
Former Philippine President Rodrigo Duterte appears at the International Criminal Court in The Hague, facing murder allegations over his deadly "war on drugs." Arrested on an ICC warrant, he is the first Asian ex-head of state to stand trial for crimes against humanity.
The President of the Democratic Republic of Congo Felix Tshisekedi is considering a sit-down with Rwanda backed armed group M23.
At just 17, Vakhtang Salia is set to swap Dinamo Tbilisi for Newcastle United, marking a major step in his career. The young striker, inspired by Georgian stars like Kvaratskhelia, will move to England in August, hoping to shine in the Premier League and one day represent his national team.
Zara owner Inditex reported a 10% rise in transport emissions in 2024, driven by increased air freight to avoid shipping delays caused by Red Sea disruptions. While the retailer made progress in reducing sourcing-related emissions, it faces challenges in meeting its long-term climate targets.
BMW expects a €1 billion loss for 2025 due to the US-EU tariff dispute, including a 25% duty on certain vehicles and tariffs on its China-made electric cars. The company hopes not all tariffs will remain for the full year.
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