Berlin, March 18 (Reuters) - Germany's lower house of parliament is poised to vote on Tuesday on a significant borrowing proposal that could bolster Europe's economy and spur growth, amid trade tensions with the United States.
The conservatives and Social Democrats (SPD), currently in talks to establish a centrist coalition post-election, are proposing the creation of a 500-billion-euro ($546.05 billion) infrastructure fund and adjustments to allow increased security spending.
If enacted, these plans would overturn Germany's long-standing fiscal conservatism, leading to a rise in euro zone yields and the euro in recent days.
Leaders from the conservative Christian Democrats, the SPD, and the Greens expressed confidence on Monday in garnering the necessary two-thirds majority to pass the constitutional amendment.
"I am confident we will achieve a two-thirds majority," said Friedrich Merz, the likely next chancellor, with only a few conservative dissenters expected. The SPD and Greens leaders also anticipate minimal opposition. The three parties can afford around 30 dissenting votes and still secure passage.
A vote is scheduled for midday following a morning debate.
Should the legislation pass the lower house, it will proceed to the Bundesrat upper house representing Germany's 16 states.
The Bavarian Free Voters' support on Monday was a critical breakthrough in the upper house. The outgoing parliament aims for swift passage to prevent potential obstruction by far-right and far-left lawmakers in the incoming Bundestag.
Merz, citing shifts in U.S. policy, emphasizes the urgency of the reforms, warning of vulnerabilities stemming from an adversarial Russia and an unpredictable U.S.
If approved, these reforms would significantly ease the fiscal constraints imposed post-2008 financial crisis, viewed by many as outdated and restrictive.
Critics, including within Merz's party, accuse him of reneging on campaign promises by swiftly adopting a new fiscal stance post-election.
Economists stress the need for broader reforms, such as reducing bureaucracy, to achieve sustained growth in an economy that has seen two consecutive years of contraction.
Merz acknowledged these challenges, suggesting tough negotiations with the SPD in drafting a coalition agreement.
"The problems will not all be solved with the decision tomorrow," Merz emphasized in a statement on Monday. "We need to address our challenges and deliver a coalition pact that propels our country forward."
($1 = 0.9157 euros)