The two political parties expected to form the next German government have agreed to significantly loosen the country’s constitutional restriction on deficits, enabling 1 trillion euros ($1.08 trillion) or more in new borrowing and spending on defense and infrastructure.

Germany called for the European Union to reform its fiscal rules to allow countries to make bigger defense expenditures, a massive shift for a country known for its spending restraint.

Friedrich Merz, Germany's soon-to-be chancellor, has announced a strategy to exempt defence spending from limits on government borrowing. View on euronews