Germany Set to Embark on Defense Spending Spree

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German lawmakers are on the verge of unlocking hundreds of billions of euros in debt-financed defense and infrastructure spending, ushering in a new era of expansive government borrowing in Europe’s biggest economy. Barring last-minute hitches, lawmakers in the lower house will back the measures today, paving the way for the upper house to approve them on Friday. The bill pushed by Chancellor-in-waiting Friedrich Merz and the Social Democrats — who are in talks on forming the next government — would effectively remove borrowing restrictions for spending on defense and includes a special, off-budget infrastructure fund that allows for borrowing of as much as €500 billion. Markets have looked favorably upon Germany’s pitch to resume its role as Europe’s growth engine. While defense stocks are the obvious winners, the spending spree could eventually spur a number of sectors.