The two political parties expected to form the next German government have agreed to loosen the country's constitution restrictions on borrowing, enabling 1 trillion euros ($1.08 trillion) or more in spending on defense and infrastructure.

The prospective partners in Germany’s next government say they will seek to loosen the nation’s rules on running up debt to allow for higher defense spending

On Wednesday, 10-year German bonds saw the worst day since March 1990 — just months after the fall of the Berlin Wall.

Germany has preached fiscal conservatism for years, but suddenly it’s taking the lead on pushing for European Union reforms aimed at freeing up more money for defense spending over the long term. A German envoy to the bloc has urged the bloc to change its budget rules in the face of geopolitical circumstances,

Friedrich Merz, Germany's soon-to-be chancellor, has announced a strategy to exempt defence spending from limits on government borrowing. View on euronews