German lawmakers gave the green light on Tuesday for a colossal spending boost for defence and infrastructure pushed by chancellor-in-waiting Friedrich Merz amid deep fears in Europe over the future strength of the transatlantic alliance.

The unprecedented fiscal package – dubbed an "XXL-sized" cash "bazooka" by German media – could pave the way for more than one trillion euros in spending over the next decade in Europe's top economy.

The historic parliament vote signalled a radical departure for a country famously reluctant to take on large state debt – or to spend heavily on the armed forces, given its dark World War II history.

Merz, who is expected to become Germany's next chancellor after his CDU/CSU alliance won last month's elections, argued that dramatic steps are needed at a time of geopolitical turmoil sparked by Russia's war with Ukraine.

European countries have been further unsettled by US President Donald Trump's outreach to Russia and signals of an uncertain commitment to Nato and Europe's defence.

Speaking to parliament, Merz cited Russia's "war of aggression against Europe" and said the funding boost would spell "the first major step towards a new European defence community".

Merz's centre-right alliance and their likely future coalition partners, the centre-left Social Democrats (SPD) of outgoing Chancellor Olaf Scholz, have hammered out the package over recent weeks.

The plan would exempt defence spending above one percent of GDP from Germany's strict debt rules and set up a 500-billion-euro (US$545-billion) fund for infrastructure investments over 12 years.

In the short term, Berlin looked set to soon approve an additional three billion euros in military aid for Ukraine. (AFP)