The parties in talks to form Germany's new government are considering quickly setting up two special funds potentially worth hundreds of billions of euros, one for defense and a second for infrastructure, three people with knowledge of the matter told Reuters.

Economists advising the parties that will likely form a new government coalition estimate around 400 billion euros ($415 billion) are needed for the defense fund and 400 billion to 500 billion euros for the infrastructure fund, the people said.

Friday's heated White House meeting between Ukrainian President Volodymyr Zelenskiy and U.S. President Donald Trump increased a sense of urgency in Berlin to act faster on spending for Germany's own defense and for Ukraine, they said.

Senior figures from Germany's conservatives and Social Democrats began exploratory talks on Friday about forming a coalition government in the hope that Friedrich Merz, leader of the conservative bloc which came first in last week's election, would form a government by Easter.

The two special funds are being discussed by three parties - the Christian Democrats (CDU), the Bavarian Christian Social Union (CSU), and the Social Democrats (SPD) of Chancellor Olaf Scholz - and they are working on details, the people said on condition of anonymity.

No final decisions have been made yet, they added.

The parties declined to comment, citing confidentiality of the talks.

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