Germany's lower house of parliament will debate a boost in infrastructure spending and sweeping changes to state borrowing rules to boost defence funding from March 13, two parliamentary sources told Reuters on Thursday.

Germany's would-be next chancellor, conservative leader Friedrich Merz, and the Social Democrats (SPD) with whom he is trying to form a government, plan to raise new debt and throw out restrictive borrowing rules in a fiscal policy sea-change.

Germany's would-be next chancellor, conservative leader Friedrich Merz, and the Social Democrats (SPD) with whom he is trying to form a government plan to throw out restrictive borrowing rules in a fiscal policy sea-change.

Germany’s political system is set up to exclude extremists. Yet the country is waking up to a new political reality that has lurched to the right with the once outcast Alternative for Germany (AfD) party now firmly established in German politics.

The prospective partners in Germany’s next government say they will seek to loosen the nation’s rules on running up debt to allow for higher defense spending.

Losing faith in Washington as a military ally, Berlin wants to rip up the old fiscal orthodoxy. But it’s now a race against the clock.

Still, borrowing of the planned scale would have a significant impact. Moody's, a rating agency, estimates that Germany's deficit would widen by up to 2.5% of GDP (still below the EU average). The debt-to-GDP ratio could increase by 5 percentage points over the next two years.

After Germany’s conservative Christian Democratic Union (CDU) won a plurality of seats in federal elections Sunday, party leader Friedrich Merz

"Whatever it takes" appears to be the motto of the Christian Democrats and Social Democrats, who are expected to form Germany's new government. They are set to reform borrowing limits to allow for more military spending.

The Alternative für Deutschland (AfD) claimed second place, winning 20.8% of the total 630 seats in the Bundestag, Germany’s federal parliament. During its election campaign, the AfD received endorsements from Elon Musk and US Vice President JD Vance.

German conservative leader Friedrich Merz, the presumptive next chancellor, has won his constituency in Sunday's parliamentary election, while a number of political heavyweights suffered humiliating defeats.