Germany Approves 2025 Budget, Marking Shift in Fiscal Policy

Germany’s parliament approved on Thursday the nation’s first annual budget since sweeping reforms to loosen fiscal rules were passed earlier this year, securing record investments to revive the economy while committing to increased defence spending. The 2025 budget allows for total investment of nearly €116 billion (approximately $136.94 billion), made possible by a €500 billion infrastructure fund and an exemption from debt rules for defence spending approved in March. “It is a huge paradigm shift in German fiscal policy,” Finance Minister Lars Klingbeil told lawmakers ahead of the vote in the Bundestag, Germany’s lower house of parliament, according to Reuters. Germany’s 2025 budget raises defence spending to 2.4% of GDP, still shy of the new target. Europe’s largest economy has been operating on a provisional budget this year, after the former ruling oalition collapsed last November, leaving no time to pass the 2025 spending plans.