Merz Says Germany Laying Foundation for Europe Defense Push #NewsGerman

(Bloomberg) — Chancellor-in-waiting Friedrich Merz said Germany’s move to unlock billions of euros in military spending should be seen as a “first great step” toward the creation of a broad European defense community including non-EU nations like the UK and Norway.

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The conservative leader made the remarks in parliament as he appealed to lawmakers to back a landmark bill that would mark a shift to a substantially more expansive fiscal policy in Berlin if it’s approved as expected in a vote later on Tuesday.

The law, presented by Merz’s CDU/CSU bloc and the Social Democrats and supported by the Greens, needs a two-thirds majority in the Bundestag to pass, before it goes to the upper house, or Bundesrat, for final approval on Friday.

Merz, who is in talks with the SPD to form the next government of Europe’s biggest economy, said the sweeping measures are urgently needed because the political order that has brought freedom, peace and prosperity to Germany is under threat and any “peace dividend” has “long since been exhausted.”

“Our decision today will not only determine our own defense capabilities in the coming years, perhaps even the coming decades,” Merz said, adding that defending the global order must remain a joint task for the US and Europe within the NATO military alliance.

“Our allies in the European Union and NATO are looking to us today, just as our adversaries and the enemies of our democratic and rules-based order are,” he said.

The likelihood of the giant spending bill securing Bundestag approval Tuesday appears high. Only a handful of dissenters expressed their opposition at separate meetings of the CDU/CSU, SPD and Greens parliamentary groups on Monday evening, prompting expressions of confidence from party leaders.

Combined, the four parties have 520 seats — 31 more than the 489 required — and the result of the vote should be known by around 3 p.m. local time.

German stocks rose on Tuesday morning, with the benchmark DAX index up as much as 1.4%, outperforming the broader European market’s gains. The country’s more domestic indexes advanced even further, with the small-cap SDAX now up more than 21% this year.

In another sign the economy could be at a turning point after a prolonged period of stagnation, a closely-watched gauge of investor sentiment for this month jumped by the most in more than two years, according to the ZEW institute.