The debate over the deal cast defense spending as an issue of growing urgency as doubts increase about the U.S. commitment to European allies. Long-term strains on Germany's debt limits, combined with the recent shift in U.S. security policy under President Donald Trump, pushed the negotiations into a deal that now goes before the parliament.

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

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." Greens' support is seen as crucial to Merz's bid to pass the debt plan with a two-thirds majority in Germany's outgoing parliament.

Germany’s chancellor-in-waiting Friedrich Merz reached an agreement with the Greens party on a fiscal reform package for large investments on infrastructure and defense, according to a report by newspaper Handelsblatt.

Germany's likely next chancellor Friedrich Merz said Friday his conservatives had struck a deal with the Greens on massively boosting defence and infrastructure spending, paving the way for the plan's approval in parliament.