EU approves Germany’s mega spending plan

BERLIN — Germany has reached an agreement with the European Commission on a multi-year fiscal plan that allows the country to ramp up investment now while committing to tighten spending in later years, a senior German official told POLITICO.

The deal lays out how Germany will increase its spending up until 2029 while remaining within revamped European Union rules intended to ensure fiscal stability within the bloc.

“In constructive talks with the European Commission,” the official said, “the German government successfully agreed on a multi-year path for the maximum permissible growth in general government net primary expenditure for the years 2025 to 2029.”

The agreement makes use of the flexibility within the EU's new fiscal rules, with Berlin pledging to curb the pace of expenditure after a short-term investment boost.

“Due to investments in infrastructure, security and defense this year and next, net expenditure in the German national budget will increase significantly,” the official said. “Significantly lower growth in net expenditure is planned for the following years.”

The plan aims to strike a balance between investment, structural reform and fiscal consolidation, referencing the Cabinet’s June 24 budget decisions. By the end of the planning horizon, the government wants to return to a more balanced path, backed by “credible consolidation measures.”

The FSP also includes structural reforms that Berlin says will help grow government revenues over time, sending “a powerful signal for economic growth and sustainable public finances.”

The plan is scheduled to be approved by the Cabinet this Wednesday and will include a statement from the Stability Council representing Germany’s federal states.