German lawmakers have reached an agreement to exempt some defense spending from the nation’s tight rules on running up debt.

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-to-be Friedrich Merz has agreed a deal with the Green party to inject hundreds of billions into the country’s military and ageing infrastructure, paving the way for his spending package to be adopted by parliament next week.

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 chancellor-in-waiting and leader of the Christian Democratic Union party (CDU) Friedrich Merz speaks during an extraordinary meeting of the German Bundestag to discuss a €500-billion infrastructure fund and a revamp of borrowing rules aimed at modernizing the military and stimulating economic growth ahead of the formation of a new parliament at end of March,