OR Germany applied for its exemption from the borrowing limits that apply to European Union (EU), in order to increase its defense spending, according to a letter from German Finance Minister Gerg Koukis.
According to Reuters, the finance minister had reported in an interview on Friday (25.4.2025) that Germany is likely to request the exemption. The EU has proposed to allow its Member States to increase defense spending by 1.5% of their GDP each year for four years without being confronted with disciplinary measures that are normally imposed when the deficit is over 3% of GDP.
“We believe that the Commission’s proposal to coordinate the National Stability and Development Covenant Consultation clause is an important additional measure to enable national defense spending on the basis of fiscal viability,” Koukis said in the letter.
The committee was hoping for the proposal to be widely adopted by the 27 EU countries and to help increase Union investment in defense by 650 billion euros over the next four years as a measure of preventing a Russian attack.
However, only Portugal and Poland have so far shown interest in the exception. EU countries with high national debt show a reluctance to borrow more to increase defense costs.
Germany’s request, according to Reuters, may encourage other countries to follow this path, although the ratio of its state debt, to 62.5% of GDP in 2024, is much lower than those of Italy, France and Spain, which are all over 100% and these countries are reluctant to seek them.
Source: RES – EIA