German lawmakers have voted to allow a huge increase in defence and infrastructure spending – a seismic shift for the country that could reshape European defence.

A two-thirds majority of Bundestag parliamentarians, required for the change, approved the vote on Tuesday.

The law will exempt spending on defence and security from Germany’s strict debt rules, and create a €500bn ($547bn; £420bn) infrastructure fund.

This vote is a historic move for traditionally debt-shy Germany, and could be hugely significant for Europe, as Russia’s full-scale invasion of Ukraine grinds on, and after US President Donald Trump signalled an uncertain commitment to Nato and Europe’s defence.

However, state government representatives in the upper house, the Bundesrat, still need to approve the moves – also by a two-thirds majority – before they officially become law. That vote is set for Friday.

Friedrich Merz, the man behind these plans and who is expected to soon be confirmed as Germany’s new chancellor, told the lower house during Tuesday’s debate that the country had “felt a false sense of security” for the past decade.

“The decision we are taking today… can be nothing less than the first major step towards a new European defence community,” he said, adding that it includes countries that are “not members of the European Union”.

EU Commission President Ursula von der Leyen called the vote “excellent news”.

Speaking at a press conference with Danish Prime Minister Mette Frederiksen, she said the vote “sends a very clear message to Europe that Germany is determined to invest massively in defence”.

Frederiksen meanwhile called it “fantastic news for all Europeans”.

Germany has long been cautious about defence spending, not just for historical reasons dating back to 1945, but also due to the global debt crisis of 2009.

But despite fears the vote would be tight, lawmakers in the end voted in favour of the changes by 513 to 207 – comfortably over the two-thirds majority required.

One leading German newspaper described this vote as “A day of destiny for our nation”.

Under the measure, any spending on defence that amounts to more than 1% of Germany’s GDP would no longer be subject to a limit on borrowing. Until now, this debt brake has been fixed at 0.35% of GDP.

The change could transform the country’s partially neglected armed forces in an era of great uncertainty for Europe.

And this vote was not just about defence. It was also about freeing up €500bn for German infrastructure – fixing things like bridges and roads, but also to pay for climate change measures, something the Green Party insisted on.

Merz, whose CDU party won Germany’s general election last month, proposed the measures swiftly after the win.

In an interview on Sunday he specifically mentioned fears that the US could pull back from defending Europe and Trump’s talks with Russian President Vladimir Putin, saying that the “situation has worsened in recent weeks”.

“That is why we have to act fast,” Merz told public broadcaster ARD.

It is a significant political win for Merz, who will, when he takes power as chancellor, now have access to hundreds of billions of euros to invest in the state – what some in Germany have called a “fiscal bazooka”.

It is also an important moment for Ukraine. The defence plans approved today by the Bundestag also allow spending on aid for states “attacked in violation of international law” to be exempt from the debt brake.

That will enable outgoing Chancellor Olaf Scholz to release €3bn in aid to Ukraine as early as next week.

Merz chose to push the changes through the old parliament, knowing the vote arithmetic was more favourable now than it would be after 25 March, when the new parliament session begins.

The far-right AFD and far-left Linke, which both performed well in February’s election, oppose Merz’s plans.

Merz has still not agreed a coalition deal to govern Germany after his election win, and has announced ambitious plans to have a government in place by Easter.

Coalition negotiations in Germany, however, can drag on for months at a time.