The strengthening of Europe’s defense potential is one of the top priorities of the Member States, according to the announcement by the Council of the eurozone finance ministers (Eurogroup), about the defensive costs and the activation of the national escape clause.
The Eurogroup’s announcement notes that Member States are determined to boost their overall defense, security and readiness, while continuing to maintain debt sustainability. As a result, the Ministry of Finance welcomes the request for the activation of the national escape clause for defense spending during the period 2025-2028 by eleven eurozone Member States at this stage.
They emphasize that it should be implemented prudently in order to facilitate the transition to a higher level of defense spending in the medium term. While the necessary increases in defense costs are expected to have an extensive effect compared to the course described in the submitted medium -term plans, the size for the eurozone as a whole will depend on this application and become clearer only over time.
At the same time, they say that focusing defense spending on productive investment and innovation can support economic activity in Europe, improve the ability of economies to absorb higher defense spending and thus ensure the best possible quality-price for public funds.
In the medium term, the Ministry of Finance will also work to gradually adjust the priorities of national budgets to adapt the higher defense spending, while remaining focused on addressing other structural and social challenges.
Except for increased defense spending, the fiscal retention remains appropriate and the announcement of the Ministers of Finance underline the commitment to implement medium -term plans in accordance with the revised framework for governance. A generally neutral fiscal stance is expected in the euro area in 2026, which appears overall suitable in the current economic environment. This is true before the impact of Germany’s medium -term plan, which Germany intends to submit by the end of July. Implement the course of net expenses recommended by the Council, through the budgets of 2026, will ensure the diversification of budgetary policies in the Member States of the euro area, further reflecting fiscal and economic challenges by country. We will enhance our efforts to improve the effectiveness, quality and synthesis of public spending.