Germany weighs special funds for defence and infrastructure

Reuters exclusively reported that the German parties in talks to form a new government are considering quickly setting up two special funds to strengthen the country’s defences and infrastructure, with economic advisors saying defence fund alone would require 400 billion euros.

Why it matters

Europe is under growing pressure to raise military spending in light of the continuing war in Ukraine and dwindling U.S. support for the continent’s defences. Ursula von der Leyen, the European Commission’s chief, suggested that the bloc could ease strict rules that limit debt levels, which would allow member states to massively ramp up spending. The continent’s defense stocks have risen sharply on hopes of higher military investments, turning it into a key issue for investors.