“From today’s debate, we can see that the majority of Member States, a large majority, are considering invoking this clause, and we, on the side of the Commission, want to do so as much as possible in a coordinated and synchronized manner,” stated the European Commissioner for Economy, Valdis Dombrovskis.
During a press conference at the conclusion of the informal meeting of EU Finance Ministers, held in Warsaw under the Polish Presidency of the Council, Valdis Dombrovskis recalled that the European Commission had asked EU countries to submit “applications for the activation of the national clauses [under the EU budgetary rules] by the end of April.”
Nevertheless, he clarified that this “is not a deadline,” aiming “only to ensure this coordination.”
“The Commission is, therefore, ready to rapidly assess the requests and to adopt recommendations in June for approval by the Council in July,” he further revealed.
Portugal has not yet decided whether it will do so, although the Government has stated that the country does not require such relief from the stringent EU budgetary rules (deficit and public debt) to increase defense spending due to the nation’s balanced fiscal situation.
The European Commission has requested that, by the end of April, the Member States activate the national safeguard clause within the framework of the community budgetary rules to allow for defense spending without risking an Excessive Deficit Procedure (EDP).
“This will facilitate the rapid increase in defense spending, allowing Member States to temporarily deviate from normal budgetary requirements. I emphasized that it will be crucial for Member States to safeguard, at the same time, fiscal sustainability, and for this purpose, the deviation is limited in scope, duration, and volume,” Valdis Dombrovskis also said today.
This is one of the measures within the 800-billion-euro defense plan for the EU, which includes the activation of the national safeguard clause of budgetary rules to avoid an EDP (for increasing public defense spending up to a maximum of 1.5% of GDP per year, resulting in 650 billion euros over four years) and a new European credit instrument for extraordinary circumstances (totaling 150 billion euros, similar to the favorable loan conditions created during the COVID-19 crisis to prevent unemployment).
The other components of the plan include reallocating funds from other budgets (such as Cohesion Funds, for civilian and military use projects), funds from the European Investment Bank (which should have more flexible rules for these investments), and private capital.
The EU may need to spend 250 billion euros annually, equivalent to 3.5% of its Gross Domestic Product (GDP), for security in light of the Ukraine war triggered by the Russian invasion.
Between 2021 and 2024, Member States’ defense spending increased by more than 30%, reaching 326 billion euros, equivalent to about 1.9% of the EU’s GDP.
Portugal invested around 1.55% of GDP in defense last year and has stated that it will reach 2% before the previously scheduled date of 2029, without disclosing how and when.
Brussels has already approved the revision of the Recovery and Resilience Plan (PRR) and is expected to evaluate two more disbursements.
