The European Commission is sticking to its estimate that member states could spend up to €650 billion on defence over the coming four years despite just half of governments requesting more fiscal headway to boost investments in the sector in time.
The EU’s executive proposed in March as part of its ‘Readiness 2030’ plan to ramp up defence expenditures to allow member states to request the activation of the national escape clause in the bloc’s Stability and Growth Pact in order to allow them to temporarily deviate from stringent fiscal rules to invest in defence.
Under the proposal, member states would be allowed to boost defence spending by 1.5% of gross domestic product (GDP) annually for four years without consequences even if this brings their total deficit over the mandated 3% of GDP.
The Commission estimated at the time that this could see an additional €650 billion invested in defence before 2030, making the proposal the key pillar in its €800 billion plan to rearm the bloc.
Member states were asked to put in their request in a coordinated manner by April 30 at the latest in the hope that the entire process could be completed before the summer break.
By Friday, 13 of the EU’s 27 member states had logged their requests, including Belgium, Denmark, Estonia, Finland, Germany, Greece, Hungary, Latvia, Lithuania, Poland, Portugal, Slovakia and Slovenia.
‘A ballpark figure’
A spokesperson for the Commission sought to present the number as a success on Friday, telling reporters that “today, essentially (we have) half of the member states, so it’s a significant number, and we have indications that this number will go up even further in the near future”.
The Commission had said earlier this week that the April 30 date was a “soft deadline” and that they would accept requests past that date as long as it had enough time to analyse them before the release of the Spring Semester Package. The report, slated for 4 June, sees the Commission giving member states recommendations on how to address economic challenges they face.
The €650 billion estimate, the Commission’s spokesperson said on Friday, “is a ballpark figure, it’s based on a set of assumptions”.
“At that time, of course, we didn’t know how many member states would actually activate the clause and we wanted to give an order of magnitude of the fiscal space that could be made available by this measure,” Balazs Ujvari added.
“But of course, it’s not possible for now to update this figure in a responsible fashion because, on the one hand, we don’t know how many countries will in the end apply – we have 13 for the moment but the option is still there to submit additional requests – (and) we don’t know at what rate they will ramp up their defence expenditure,” he added.
The first updated estimate will only be available next year, he went on, based on defence expenditure data from 2025.
To see their requests approved, member states need to prove that they’re facing exceptional circumstances outside their control, that these exceptional circumstances have an impact on their public finances, and that the deviation under the national escape clause won’t endanger their fiscal sustainability over the medium term.
SAFE(r) loans?
Several of the member states that have requested the deviation are however targeted by an Excessive Deficit Procedure, meaning their deficits exceed the allowed 3% of GDP threshold. These include Belgium (4.8%), Hungary (4.1%), Poland (7.9%), and Slovakia (8.8%).
If requests to activate the national escape clause are granted to member states under the procedure, “this will be taken into account when we do our assessment and we will take into account the flexibility which is available to this member state because of the national escape clause,” Ujvari, from the Commission, also said Friday.
The other countries at risk of penalties for their fiscal situation are France, Italy, Malta, and Romania.
France, whose deficit stood at 6.1% of GDP in the last quarter of 2024, is expected not to put in a request, Euronews understands, but would likely participate in the other financial mechanism tabled under ‘Readiness 2030’.
Under the SAFE programme, member states will be able to secure parts of €150 billion the Commission plans to raise on the market and release to member states as loans.
Unlike money from national coffers, these EU funds would be earmarked for weapon systems that are primarily European-made, and the result of joint procurements among multiple member states.
The proposal is currently being examined by the Council. Once adopted, member states will have six months to apply for such a loan.
