Economy & public financesGermany

In forceThe SVIKG act of 30 September 2025 applies retroactively from 1 January 2025; the acts on the Länder share and on the Länder borrowing margin followed on 23 October 2025.

2025 debt brake reform and the €500bn infrastructure and climate neutrality fund

The constitutional amendment of 22 March 2025 exempts from the debt brake the defence and security spending above 1% of GDP, gives the Länder as a whole a structural borrowing margin of 0.35% of GDP and allows a special fund of up to €500bn, financed by borrowing outside the debt brake, for additional investment in infrastructure and climate neutrality by 2045. The SVIKG act set up the fund from 1 January 2025: €100bn for the Länder, €100bn for the Climate and Transformation Fund, investments approved until the end of 2036.

Updated: November 5, 2026Next milestone: January 1, 2027 — Yearly Länder report to the federal government on investments financed by their €100bn share

At a glance

Reference text

Gesetz zur Änderung des Grundgesetzes (Artikel 109, 115 und 143h) vom 22. März 2025 (Act amending the Basic Law — Articles 109, 115 and 143h)[1]

No. BGBl. 2025 I Nr. 94 · March 22, 2025

Read the text ↗

Carried by

  • Friedrich Merz[5]Chair of the CDU/CSU parliamentary group — co-author of the bill tabled by the SPD and CDU/CSU groups · 2025 · Initiator
  • Lars Klingbeil[5][14]Chair of the SPD parliamentary group (March 2025), then Federal Minister of Finance — fund act and 2025-2026 budgets · 2025 · Initiator
  • Bündnis 90/Die Grünen[5]Parliamentary group whose votes were needed for the two-thirds majority — joint amendment with the SPD and CDU/CSU (additionality, climate neutrality by 2045, €100bn for the Climate and Transformation Fund, 12-year term) · 2025 · Amendment

Implementation

  • Federal Ministry of Finance — manages the special fund
  • Bundestag — yearly federal budget and the fund’s economic plan
  • The 16 Länder and their municipalities — €100bn share and structural borrowing margin

Status

In force

since October 2, 2025[16][17][19][21]

The SVIKG act of 30 September 2025 applies retroactively from 1 January 2025; the acts on the Länder share and on the Länder borrowing margin followed on 23 October 2025.

Stated objective

Finance a lasting build-up of the Bundeswehr in response to a « fundamental change in the security architecture », catch up on the investment backlog in infrastructure through an « investment offensive » meant to strengthen medium-term growth, finance additional investment towards climate neutrality by 2045, and give the Länder room to borrow in view of the « challenging financial situation of the Länder and municipalities ».[5]

According to the explanatory statement of the SPD and CDU/CSU bill and the amendment adopted in the Budget Committee

  • Maximum volume of the special fund

    €500bn

    investments approved over 12 years · according to Article 143h of the Basic Law and the SVIKG act[4][17]

  • Structural borrowing margin of the Länder as a whole

    0.35% of GDP

    each year, from 2025 · according to Article 109 of the Basic Law; before the reform, the Länder could not borrow structurally[2][21][11]

Main measures

  • Defence and security exemption: the federal borrowing counted under the debt brake is reduced by the amount by which spending on defence, civil protection, intelligence services, the protection of IT systems and aid to states attacked in breach of international law exceeds 1% of nominal GDP. No ceiling and no time limit.[3][1][11]
  • The ordinary federal rule is unchanged: structural borrowing up to 0.35% of GDP plus the cyclical component; the emergency clause remains.[3]
  • Special fund « Infrastructure and Climate Neutrality » with its own borrowing authority of up to €500bn, outside the debt brake: €100bn for the Länder, €100bn paid to the Climate and Transformation Fund in ten equal yearly tranches until 2034, the rest for federal investment in civil protection, transport, hospitals, energy, education and childcare, research, digitalisation, housing and sport.[4][17][23]
  • Additionality: fund money counts as additional only when federal investment in the core budget exceeds 10% of its spending (both adjusted for financial transactions, total spending also for the defence exemption).[17][4]
  • Länder: €100bn shared out by fixed percentages (21.1% for North Rhine-Westphalia, 15.7% for Bavaria…), for investments of at least €50,000 approved by the end of 2036; each Land decides the municipal share, giving particular weight to financially weak municipalities. Their 0.35% borrowing margin is divided two thirds by tax revenue and one third by population.[20][21]

In data

How the €500bn special fund is split[4][17][23]

Approval window 2025-2036, billions of euros

How the €500bn special fund is split — chart values
BeneficiaryAmount set by law
Federal investment (Remainder of the fund, as stated by the federal government.)€300bn
Länder and municipalities€100bn
Climate and Transformation Fund (Ten equal yearly tranches until 2034.)€100bn

Scale starts at €0bn · Maximum amounts financed by borrowing, not executed spending.

Federal borrowing planned in the 2026 budget, by legal basis[22]

2026, billions of euros, as adopted by the Bundestag on 28 November 2025

Federal borrowing planned in the 2026 budget, by legal basis — chart values
Borrowing2026 budget as adopted
Core budget — within the debt rule€40.39bn
Core budget — defence and security exemption€57.57bn
Infrastructure and Climate Neutrality fund€58.07bn
Bundeswehr special fund (2022)€25.51bn

Scale starts at €0bn · Planned amounts, not outturn. Only the first row is limited by the debt brake.

Budget balance

-2.9% GDP

2025

Deutsche BundesbankSee the card →

Key figures

Public debt

63.4% GDP

Q2 2026

Deutsche BundesbankSee the card →

Defense spending

1.8% GDP

2024

World BankSee the card →

Bundestag votes in favour of the amendment

512

18 March 2025 · Observed

according to the Bundestag[5]

206 against; two-thirds threshold: 489.

Federal borrowing under the defence exemption

€57.57bn

2026 · Announced

according to the 2026 federal budget adopted by the Bundestag[22][13]

Budgeted amount; €32.07bn was planned in the draft 2025 budget.

Timeline

  1. Current step

    Approval window of the fund: investments approved until 31 December 2036[17]

    Interim evaluations of federal measures after four and eight years; the fund’s loans must be repaid within a reasonable period once the borrowing authority is used up, at the latest from 1 January 2044.

  2. Announced

    CDU, CSU and SPD agree to put a reform of the fiscal constitution to the outgoing Bundestag[7]

    Agreed during the exploratory talks that followed the federal election of 23 February 2025.

  3. SPD and CDU/CSU table the constitutional bill (Drucksache 20/15096)[5]

    The Greens (20/15098) and the FDP (20/15099, a defence fund) tabled their own constitutional bills on defence spending.

  4. Under debate

    First reading in the Bundestag and hearing in the Budget Committee[5]

  5. Federal Constitutional Court rejects the first challenges against convening the outgoing Bundestag[8][9][7]

    Decisions 2 BvE 2/25, 3/25 and 5/25 (applicants included the pre-group Die Linke of the new Bundestag and the AfD group): the outgoing Bundestag keeps its full powers until the new one convenes. Urgent applications of a non-attached member were also rejected (2 BvE 4/25).

  6. Budget Committee adopts an amended version with the votes of the SPD, CDU/CSU and Greens[5]

    Report 20/15117: the exemption is extended from defence to civil protection, intelligence services, IT security and aid to states attacked in breach of international law; the fund becomes « additional » investment, also for climate neutrality by 2045, with €100bn for the Climate and Transformation Fund and a 12-year term instead of 10.

  7. Further urgent applications rejected by the Federal Constitutional Court[10]

    Decisions 2 BvE 7/25, 8/25 and 10/25 to 13/25: no interim order against the sitting of 18 March; whether members’ rights were infringed is left to the main proceedings.

  8. Outgoing Bundestag adopts the amendment: 512 yes, 206 no[5]

    Roll-call vote, no abstention; the two-thirds threshold of the 20th Bundestag was 489 votes. A resolution of the SPD, CDU/CSU and Greens asks the next government to finance the renewable energy act from the core budget. The 21st Bundestag convened on 25 March.

  9. Adopted

    Final adoption: the Bundesrat approves with 53 votes[6][5]

    After the Bundestag vote of 18 March 2025 (512 yes, 206 no); both chambers needed a two-thirds majority.

  10. In force

    Constitutional amendment in force[1]

    Signed on 22 March, published in the Federal Law Gazette on 24 March 2025, in force the day after.

  11. Draft 2025 federal budget: first use of the defence exemption[13]

    Of €81.8bn of net borrowing, €49.7bn is allowed by the debt rule and €32.07bn is justified by the new exemption: €75.1bn of covered spending, above the €43.1bn equal to 1% of 2024 GDP. The fund’s plan foresees €37.2bn of outlays in 2025.

  12. Bundestag adopts the 2025 budget and the act setting up the fund (SVIKG)[14]

    SVIKG adopted with the votes of the CDU/CSU and SPD, against the AfD, Greens and Die Linke. The 2025 budget (324 yes, 268 no) plans €81.78bn of net borrowing in the core budget; €37.24bn is available from the fund in 2025, of which €10bn for the Climate and Transformation Fund.

  13. Bundesrat lets the SVIKG act pass[15]

  14. In force

    The special fund is set up (SVIKG act published)[16][17][19][21]

    The SVIKG act of 30 September 2025 applies retroactively from 1 January 2025; the acts on the Länder share and on the Länder borrowing margin followed on 23 October 2025.

  15. Bundesrat approves the distribution of the Länder’s €100bn[18][20][19][21]

    Länder and Municipal Infrastructure Financing Act (LuKIFG): shares set per Land, one third by population and two thirds by tax revenue; published on 23 October 2025 together with the act dividing the 0.35% borrowing margin among the Länder (StruKomLäG).

  16. Bundestag adopts the 2026 budget: €97.96bn of net borrowing, €57.57bn under the defence exemption[22]

    322 yes, 252 no. The debt rule allows €40.39bn, fully used; borrowing by the Bundeswehr fund (€25.51bn) and the infrastructure and climate neutrality fund (€58.07bn) is also outside the debt brake.

  17. Upcoming — the outcome is not known

    Yearly Länder report to the federal government on investments financed by their €100bn share[20]

    Planned, started and completed measures, every 1 January since 2026.

  18. Upcoming — the outcome is not known

    Finance ministry notifies each Land of its structural borrowing margin for 2028[21]

    Results are sent on 1 April each year and apply to the following budget year; they cannot be carried over.

  19. Upcoming — the outcome is not known

    At least one third of each Land’s share should be committed to approved projects[20]

The debate

Citoyen takes no position: arguments are reported as their authors put them.

According to its supporters

  • The CDU/CSU and SPD argue that deterrence must quickly be « credibly backed militarily » and that Germany must take on leadership in Europe; Defence Minister Boris Pistorius summed it up: « the threat situation comes before the state of the coffers ».[5]
  • For the authors, the investment backlog is « palpable everywhere »: the fund secures a long-term financing basis for modernising the country and can « noticeably strengthen » medium-term growth. The Association of German Cities « very much » welcomed the bill, municipalities expecting a deficit of more than €13bn for 2024.[5][12]
  • Thiess Büttner, chair of the independent advisory board of the Stability Council, found the 1% of GDP threshold « understandable » given the goal of raising security capacity quickly, and judged that raising defence spending by 1% of GDP would not overstretch the sustainability of public finances in the medium term.[11]

According to its opponents

  • The FDP group chair Christian Dürr argued that the debt brake was being turned into « waste paper », starting « unrestrained debt-making », and that the unlimited defence exemption softens responsible fiscal policy; the FDP proposed instead a one-off Bundeswehr fund of up to €300bn, rejected.[5]
  • The AfD, Die Linke and the BSW contested the procedure: a Bundestag already voted out was amending the Constitution days before the new one met. Die Linke denounced a « blank cheque for rearmament »; the AfD spoke of a « gigantic mortgage » on future generations. The Constitutional Court rejected their urgent applications.[5][8]
  • Thiess Büttner warned that €50bn a year of extra deficits from the fund would raise the debt ratio by about 4 points by 2028, that the growth needed to offset it appears « unrealistic », and that its use must stay within EU fiscal rules — or be offset by consolidation elsewhere.[11]
  • Having voted for the amendment, the Greens accused the government in September 2025 of relabelling spending as investment (« IT posts suddenly count as investment ») and warned of a « flash in the pan on credit », with a debt ratio rising above 80%.[14]

Indicators to watch

  • General government debt, % of GDP (Maastricht) · Deutsche BundesbankSee the card →
  • General government balance, % of GDP · Eurostat / Deutsche BundesbankSee the card →
  • Defence spending, % of GDP · SIPRI / Banque mondialeSee the card →
  • Inland transport infrastructure investment · OCDESee the card →
  • Federal government borrowing rate (Bund yields) · Deutsche BundesbankSee the card →
  • Investment ratio of the federal core budget (additionality test, 10%) · Bundesministerium der Finanzenno Citoyen card yet

Sources

  1. [1]Gesetz zur Änderung des Grundgesetzes (Artikel 109, 115 und 143h) vom 22. März 2025 — BGBl. 2025 I Nr. 94 — Bundesgesetzblatt (recht.bund.de), March 24, 2025
  2. [2]Grundgesetz für die Bundesrepublik Deutschland — Art. 109 — Bundesministerium der Justiz (gesetze-im-internet.de)
  3. [3]Grundgesetz für die Bundesrepublik Deutschland — Art. 115 — Bundesministerium der Justiz (gesetze-im-internet.de)
  4. [4]Grundgesetz für die Bundesrepublik Deutschland — Art. 143h — Bundesministerium der Justiz (gesetze-im-internet.de)
  5. [5]Bundestag bringt Grundgesetzänderungen zur Schuldenbremse auf den Weg / Haushaltsausschuss beschließt Änderungen des Grundgesetzes / Mehrheit für Reform der Schuldenbremse: 512 Abgeordnete stimmen mit Ja (Drucksachen 20/15096, 20/15117) — Deutscher Bundestag, March 18, 2025
  6. [6]BundesratKOMPAKT — 1052. Sitzung am 21.03.2025: Bundesrat macht Weg frei für Sondervermögen und Lockerung der Schuldenbremse — Bundesrat, March 21, 2025
  7. [7]Beschluss des Zweiten Senats vom 13. März 2025 — 2 BvE 3/25 (Alt-Bundestag I) — Bundesverfassungsgericht, March 13, 2025
  8. [8]Pressemitteilung Nr. 25/2025 — Erfolglose Anträge gegen Einberufung des alten Bundestages vor Zusammentritt des neu gewählten Bundestages — Bundesverfassungsgericht, March 14, 2025
  9. [9]Pressemitteilung Nr. 26/2025 — Erfolglose Eilanträge gegen die Gestaltung des Gesetzgebungsverfahrens zur Änderung des Grundgesetzes — Bundesverfassungsgericht, March 14, 2025
  10. [10]Pressemitteilung Nr. 27/2025 — Weitere erfolglose Eilanträge gegen die Gestaltung des Gesetzgebungsverfahrens zur Änderung des Grundgesetzes — Bundesverfassungsgericht, March 17, 2025
  11. [11]Stellungnahme zur Anhörung des Haushaltsausschusses des Deutschen Bundestages am 13. März 2025 zum Entwurf eines Gesetzes zur Änderung des Grundgesetzes (Art. 109, 115, 143h) — Prof. Dr. Thiess Büttner — Deutscher Bundestag, Haushaltsausschuss, March 12, 2025
  12. [12]Stellungnahme des Deutschen Städtetages zum Entwurf eines Gesetzes zur Änderung des Grundgesetzes (Artikel 109, 115 und 143h) — Deutscher Bundestag, Haushaltsausschuss, March 13, 2025
  13. [13]hib 262/2025 — Haushaltsentwurf 2025 zugeleitet — Deutscher Bundestag (heute im bundestag), June 27, 2025
  14. [14]Namentliche Abstimmung: Haushaltsgesetz 2025 (mit Haushaltsbegleitgesetz 2025 und Sondervermögen Infrastruktur und Klimaneutralität) — Deutscher Bundestag, September 18, 2025
  15. [15]BundesratKOMPAKT — 1057. Sitzung am 26.09.2025: Bundesrat billigt Sondervermögen „Infrastruktur und Klimaneutralität“ — Bundesrat, September 26, 2025
  16. [16]Gesetz zur Errichtung eines Sondervermögens Infrastruktur und Klimaneutralität (SVIKG) vom 30. September 2025 — BGBl. 2025 I Nr. 230 — Bundesgesetzblatt (recht.bund.de), October 2, 2025
  17. [17]Gesetz zur Errichtung eines Sondervermögens Infrastruktur und Klimaneutralität (SVIKG) — Bundesministerium der Justiz (gesetze-im-internet.de)
  18. [18]BundesratKOMPAKT — 1058. Sitzung am 17.10.2025: Bundesrat stimmt Verteilung der 100 Milliarden Euro aus dem Sondervermögen zu — Bundesrat, October 17, 2025
  19. [19]Länder-und-Kommunal-Infrastrukturfinanzierungsgesetz (LuKIFG) vom 20. Oktober 2025 — BGBl. 2025 I Nr. 246 — Bundesgesetzblatt (recht.bund.de), October 23, 2025
  20. [20]Gesetz zur Finanzierung von Infrastrukturinvestitionen von Ländern und Kommunen (LuKIFG) — Bundesministerium der Justiz (gesetze-im-internet.de)
  21. [21]Gesetz zur Ausführung von Artikel 109 Absatz 3 Satz 6 und Satz 7 des Grundgesetzes und zur Änderung anderer Gesetze (Strukturkomponente-für-Länder-Gesetz) vom 20. Oktober 2025 — BGBl. 2025 I Nr. 247 — Bundesgesetzblatt (recht.bund.de), October 23, 2025
  22. [22]Namentliche Abstimmung: Haushaltsgesetz 2026 — Deutscher Bundestag, November 28, 2025
  23. [23]Sondervermögen für Infrastruktur und Klimaneutralität — Investitionsoffensive für das ganze Land — Die Bundesregierung, October 19, 2026