German parliament passes debt rule reform, half-trillion euro fund

Germany's outgoing parliament on Tuesday passed a massive increase in government borrowing, including a sweeping change to the country's debt rules.

Chancellor-in-waiting Friedrich Merz's conservatives and the centre-left Social Democrats, currently in talks to form a government following last month's election, had proposed a 500-billion-euro ($546 billion) fund for infrastructure and changes to borrowing rules to bolster defence and revive growth in Europe's largest economy.

To secure the necessary two-thirds majority in parliament, they had to integrate last-minute demands from the Greens party into their proposal.

The legislation now goes to the Bundesrat upper house, which represents Germany's 16 states, and is set to vote on Friday.

Senior officials of the conservatives and the Social Democrats have said they expect the upper house to pass the legislation.

($1 = 0.9159 euros)