German finance minister says spending may increase despite EU fiscal rules

German Finance Minister Lars Klingbeil said the European Union's debt obligations rules will not prevent the country's planned spending increase. Klingbeil also expressed confidence in reaching a compromise with the European Commission on this issue.

In March, the German parliament approved plans for a significant increase in spending. Among these initiatives is the exclusion of defense investments from borrowing limits. Reuters reports that this strategy raises questions about whether the country will exceed the bloc's fiscal limits. Klingbeil says the situation will be fully clarified after the Ministry of Finance publishes the draft budget for 2025 in June.

Earlier, Chancellor Friedrich Merz's new coalition government with Klingbeil's centre left Social Democrats had already announced measures such as tax cuts and minimum wage increases. Reuters specifies that the aim of these initiatives is to overcome the stagnation of Europe's largest economy.