Danish Prime Minister Mette Frederiksen visits Berlin

German Chancellor Friedrich Merz speaks during a joint press conference with Danish Prime Minister Mette Frederiksen (not pictured), at the Chancellery in Berlin, Germany June 11, 2025. REUTERS/Annegret Hilse

Chancellor Friedrich Merz’s cabinet adopted a plan to boost infrastructure and defence outlays, with 115 bln euros of investment coming in 2025. This will help Germany and Europe’s weak economies. But a shakeup of Berlin’s regulatory straitjacket is needed for a lasting impact.

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  • Germany’s cabinet approved on June 24 a draft budget for 2025 and a budget framework for 2026 with record investments to revive the economy and a strong commitment to defence spending ahead of a key NATO summit.
  • To stimulate growth after Europe’s biggest economy contracted for three consecutive years, the drafts include investments of 115.7 billion euros ($134 billion) in 2025 and 123.6 billion euros in 2026, up from 74.5 billion euros in 2024.

Editing by Neil Unmack; Production by Oliver Taslic

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Pierre Briançon is a Breakingviews columnist, writing on European business and economics. He was previously a writer or editor at Barron’s, Politico, and Breakingviews for a first stint as Paris correspondent and European editor. For the first part of his career he was a foreign correspondent and editor at Libération, the French newspaper. He was also an economics columnist for Le Monde and for French public radio.