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

German Chancellor-in-waiting Friedrich Merz reached an agreement with the Greens on Friday on a massive increase in state borrowing in Europe's largest economy, sources close to the negotiations said,

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,

Merz, who aims to lead a government with the Social Democrats in the coming weeks, is in a rush to push through a big boost in spending on defence and creaking infrastructure. After winning elections last month,

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."

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.