Call it a very big bazooka indeed, or Germany’s “whatever it takes” moment. There are few more striking signs of how Donald Trump is upturning the old world order than incoming chancellor Friedrich Merz’s epochal agreement with the rival Social Democrats to loosen Germany’s debt rules to fund massive investment in infrastructure and the military. The resulting stimulus could be the largest since after reunification in 1990. Its partners should celebrate Germany’s move back towards providing the economic, political and defensive leadership Europe needs.

The shift is all the more surprising given the ambivalence of Merz and his Christian Democrats towards loosening Germany’s 16-year-old debt brake during the recent election campaign. But the flexibility to dump old opinions when the facts change is a sign of leadership. Merz and his likely coalition partners deserve credit for recognising the realities of the world under Trump, and responding swiftly rather than — as other EU capitals had feared — spending months in argument and indecision.

The package is bigger than expected even days earlier. The €500bn special purpose vehicle for infrastructure investment, with one-fifth going to federal states, should reverse years of underfunding in transport, hospitals, energy, education and digital infrastructure — and help to revive flagging German industry. Allowing essentially unlimited borrowing for defence spending will give long-term predictability to the Bundeswehr. Analysts project expenditure could reach 3.5 per cent of GDP in 2027, from 2.1 per cent in 2024. In an economy of Germany’s size that is a huge boost.