The two political parties expected to form the next German government have agreed to significantly loosen the country’s constitutional restriction on deficits, enabling 1 trillion euros ($1.08 trillion) or more in new borrowing and spending on defense and infrastructure.

The prospective partners in Germany’s next government said Tuesday that they will seek to loosen the nation’s rules on running up debt to allow for higher defense spending. Center-right election winner Friedrich Merz,

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,