German conservative leader Friedrich Merz reached a tentative agreement with the Green party on a debt-funded spending package for defense and infrastructure, people familiar with the discussions said.

Germany's Greens may refuse to back plans by likely next chancellor Friedrich Merz for a massive increase in state borrowing, with a party source on Monday warning "approval is becoming less likely with each passing day".

An agreement has been reached on plans by German chancellor hopeful Friedrich Merz to massively ramp up public borrowing, a source from the Greens party said on Friday, adding: "We are satisfied." Greens' support is seen as crucial to Merz's bid to pass the debt plan with a two-thirds majority in Germany's outgoing parliament.