EU ministers activate flexibility in EU fiscal rules for Bulgaria, 14 other EU states, to increase defence spending

European Union finance ministers activated on July 8 the national escape clause under the Stability and Growth Pact (SGP) for 15 member states to help facilitate their transition to higher defence spending at national level while ensuring debt sustainability, a statement by the Council of the EU said.

The member states concerned are Belgium, Bulgaria, Croatia, Czechia, Denmark, Estonia, Finland, Greece, Hungary, Latvia, Lithuania, Poland, Portugal, Slovakia and Slovenia.

The clause covers a period of four years and a maximum of 1.5 per cent of GDP in flexibility.

In practice, this activation means that the European Commission and the Council of the EU may decide not to open a new excessive deficit procedure for these 15 member states, even though they exceed the maximum net expenditure path as approved by the Council, provided that this excess is due to increased defence spending.

For all other expenses, member states remain bound by the budgetary rules and must remain committed to the implementation of the revised economic governance framework irrespective of the clause’s activation.

The use of this flexibility should contribute substantially to bolstering the defence and security capabilities of the European Union and the protection of citizens, the statement said.

It will also reinforce the EU’s overall defence readiness, reduce strategic dependencies, address critical capability gaps and strengthen the European defence technological and industrial base across the EU, it said.

(Photo: Diehl Defence)