Merz announces agreement on major debt overhaul: 'Germany is back'

BERLIN, March 14 (Reuters) - Germany's likely next chancellor Friedrich Merz announced a deal to drastically overhaul the country's debt rules to allow a boom in defence and security spending as well as 500 billion euros in infrastructure investment in the coming 12 years.

His conservatives and their prospective Social Democrat coalition partners reached agreement with the Greens to exempt spending above 1% of GDP on defence and security more broadly, including civil protection, intelligence and "aid to countries under illegal attack" from the nation's constitutionally enshrined debt brake.

"Germany is back," Merz said, adding that the agreement signalled to partners and adversaries Berlin's willingness to defend itself.