EU clears Poland, 14 other states to hike defence spending
The Council of the European Union (EU Council) has activated the so-called escape clause for 15 member states, including Poland, which allows them to exclude defence spending from the EU's budget constraints.
"The Council today activated 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," the EU Council said in a statement on its website on Tuesday.
Apart from Poland, the beneficiary countries include Belgium, Bulgaria, Croatia, Czechia, Denmark, Estonia, Finland, Greece, Hungary, Latvia, Lithuania, Portugal, Slovakia and Slovenia.
"At this critical juncture, investment in our defence capabilities must remain our top priority," Stephanie Lose, Danish minister for economic affairs, was quoted as saying in the statement. "Today's activation of the national escape clause will allow member states to ramp up defence spending while maintaining sustainable public finances."
On July 1, Denmark took over the six-month rotating presidency of the EU Council from Poland.
In line with the EU fiscal rules, member states may not exceed the budget deficit level of 3 percent of their GDP and must keep their debt below 60 percent of GDP. The defence expenditures made by the escape clause beneficiaries will be excluded from the rules.
The clause will allow the 15 countries to spend 1.5 percent of GDP more on defence without the risk of triggering the EU's excessive deficit procedure, which kicks in when a member state exceeds the 3-percent budget deficit threshold.
In the case of countries where the excessive deficit procedure is already in place, including Poland, the EU will take the clause into account when assessing the country's progress in reducing its deficit.
The suspension of spending rules with reference to defence expenditures is an element of a programme of re-arming the EU that the European Commission President Ursula von der Leyen put forward in February.
According to initial estimates, the re-arming programme should mobilise an additional EUR 800 billion across the EU, including EUR 150 billion under the EU's loan programme SAFE, and the remaining EUR 650 billion through suspended spending rules for defence. (PAP)
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