Merz's conservatives and the center-left Social Democrats – in talks to form a coalition after February's general election – unveiled the plans for vast extra outlays last week and are now racing to push them through the current legislation.

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,

German conservative leader Friedrich Merz said he was “very optimistic” that a landmark debt-spending package will be approved after a parliamentary debate on Thursday laid bare a deep rift with the Greens,

Such a plan would mark a step-change in Germany’s traditionally conservative approach to public borrowing. Berlin in 2009 enshrined a debt brake in its constitution, which limits government borrowing and keeps the structural deficit at 0.35 per cent of GDP.

By Sarah Marsh, Thomas Escritt and Matthias Williams BERLIN (Reuters) -Chancellor-in-waiting Friedrich Merz urged sceptical lawmakers on Thursday to back his proposals for a massive increase in state borrowing,