Germany: Coalition Agreement on Debt Brake Reform Faces Constitutional Court Challenges

Today (12.3.25), CDU – CSU aims to finalize the heated economic package deal, securing Green Party agreement for infrastructure investments to ensure it reaches the Bundestag tomorrow, Thursday, March 13, according to Handelsblatt reports. If not presented tomorrow, the entire constitutional reform plan aimed at relaxing Germany’s debt brake could face failure due to tight deadlines. The economic package from CDU – SPD and the defense bill proposed by the Greens will undergo a first reading tomorrow. Once this occurs, changes to existing plans won’t be possible, only amendments, as reported by Handelsblatt. Each passing day increases the risk of amendments hitting the ‘wall’ of the Federal Constitutional Court. Some interpreted the court’s ruling on the heating law as requiring at least seven days for readings. CDU – CSU and SPD aim to schedule the second and third readings for next Tuesday, March 18. However, this isn’t a strict deadline; shorter reading periods might also be legal. These uncertainties make negotiations complex with no fixed end date but increasing risks. Meanwhile, European Council President Antonio Costa supported Chancellor Olaf Scholz’s proposal to exclude defense expenditures in Europe from the European Stability Pact once a specific threshold is met. Costa emphasized long-term thinking since joint defense efforts aren’t temporary. Scholz proposed permanently excluding defense costs from the Stability Pact following recent EU summit discussions, though the EU Commission currently backs only a temporary exemption.