German Chancellor-in-waiting Friedrich Merz reached an agreement with the Greens on Friday on a massive increase in state borrowing just days ahead of a parliamentary vote next week.

German lawmakers have reached an agreement to exempt some defense spending from the nation’s tight rules on running up debt.

Germany's chancellor-in-waiting and leader of the Christian Democratic Union party (CDU) Friedrich Merz speaks during an extraordinary meeting of the German Bundestag to discuss a €500-billion infrastructure fund and a revamp of borrowing rules aimed at modernizing the military and stimulating economic growth ahead of the formation of a new parliament at end of March,

An agreement has been reached on plans by German chancellor hopeful Friedrich Merz to massively ramp up public borrowing, a source from the Greens party said on Friday, adding: "We are satisfied."

Germany’s likely next chancellor on Thursday urged outgoing members of parliament to exempt some defense spending from the nation’s tight self-imposed rules on running up debt.

German conservative leader Friedrich Merz reached an agreement with the Green party on a debt-funded spending package for defense and infrastructure, overcoming a key hurdle ahead of a crunch vote in parliament next week.

The agreement between centrist parties, led by the likely next chancellor, Friedrich Merz, was billed as a response to America’s shrinking security guarantees.