European markets soar as Germany lifts ‘debt brake’ to raise defence spending

Berlin’s ‘big bazooka’ move sends industrial stocks surging but fiscal sea change also hikes borrowing costs

Business live – German debt ‘bazooka’ rallies stocks and euro

European financial markets have rallied sharply and German borrowing costs have soared after the country’s prospective leaders announced a historic deal to loosen its “debt brake” rule to boost spending on defence.

The yield – in effect the interest rate – on 30-year German government bonds rose by 16 basis points, after having earlier jumped by as much as 25 basis points to 3.07% in its biggest increase since October 1998.

Topics

Germany’s debt brake problem

Incoming chancellor Friedrich Merz says he will try to adopt a constitutional change in the next 30 days
Financial Times - Feb. 25
Why Germany’s debt rules are a bellwether for EU defence spending

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UK to raise defence spending to 2.5% of GDP by 2027

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Financial Times - Feb. 25
Germany’s future coalition partners to relax debt rules to boost defence budget

Conservative alliance and Social Democrats to propose exempting spending of more than 1% of GDP on defence. The prospective partners in Germany’s next government have said they will seek to loosen ...
The Guardian - 1d
Starmer prepares to meet Trump after raising defence spending

The PM will head to Washington a day after announcing military budgets would rise to 2.5% of national income by 2027.
BBC News - Feb. 26
Germany’s Merz in ‘difficult’ talks over plans to boost defence spending

Debate over multibillion-Euro top-up to military fund is playing a central role in exploratory coalition discussions
Financial Times - 5d
Germany’s Merz strikes ‘game-changing’ deal to boost defence spending

Move to relax debt brake marks historic shift in country’s conservative approach to borrowing
Financial Times - 19h
Germany seeks ‘long-term’ EU exemption for defence spending

Friedrich Merz leads German pivot in Europe’s ‘rearmament’ race
Financial Times - 12h
‘A risky bet’: Friedrich Merz criticised over plan to lift Germany’s debt rules

Chancellor-in-waiting accused of taking part in ‘debt orgy’ after proposing loosening rules to boost defence. Germany’s chancellor-in-waiting, Friedrich Merz, is facing a barrage of criticism from ...
The Guardian - 9h