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The clause to increase military spending has been activated
Brussels – Twelve European Union countries have formally asked the European Commission to activate the national safeguard clause to increase defence spending, temporarily circumventing the constraints of the Stability Pact. These are Belgium, Denmark, Estonia, Finland, Germany, Greece, Hungary, Latvia, Poland, Portugal, Slovakia and Slovenia. The measure, an integral part of the “Readiness 2030” plan (formerly known as “ReArm Europe”), provides for the possibility for member states to obtain additional fiscal space of up to 1.5% of GDP per year for defence investments, without this affecting the calculation of the structural deficit. The objective is clear: to strengthen the Union’s military capacity in light of growing geopolitical tensions, starting with the war in Ukraine.
The request for derogations had to be sent by the end of April, but the Commission left a window of tolerance of a few days. The EU executive plans to evaluate the requests received by spring 2025, when it will publish the European six-monthly package. The formal vote by the EU Council could take place by July, thus allowing the clauses to be effectively activated already during the year. The European Commissioner for Economy Valdis Dombrovskis welcomed the requests: “The EU is taking a decisive step forward to increase spending on defence and strategic readiness. The clause will provide significant budgetary space to invest in national defence capabilities and in the European industry of the sector”. The derogation, however, is not automatic or unlimited: the additional spending margin will be allowed only for investments in the “Defence” function, as indicated in the Cofog classification (government functions), and can be applied for a maximum of four years. Among the large founding countries of the EU, Italy, France and Spain have not yet formalized the request. From Rome, sources from the Ministry of Economy and Finance say that a decision will be made after the NATO summit in June. Spain, through Minister Carlos Cuerpo, will decide “in the coming months”. Paris is more cautious: Finance Minister Eric Lombard has raised doubts about the sustainability of French debt, implying that France may not join.
Some Northern European countries are more strongly opposed. The Netherlands have already ruled out activating the clause, while Sweden is reportedly considering an increase in defence spending even in deficit, but without resorting to the tax exemption. According to the Commission, the push for military spending represents an extraordinary response to an exceptional historical phase. “Russia’s war of aggression against Ukraine constitutes a direct threat to European security,” reads the statement released by Brussels, “and creates significant pressure on the public budgets of Member States, which must urgently strengthen their defence capabilities.” The Readiness 2030 plan includes, in addition to the clause, financing of 150 billion euros through the SURE instrument, designed to accelerate large orders and support the European war industry. The total spending potential that can be unlocked thanks to the new regulatory framework would be close to 650 billion euros in the coming years.
Despite the scope of the plan, the actual mobilization of resources will take time. Investments in defence involve complex and lengthy procedures, with multi-year contracts and complex procurement. The first certain data on the actual use of resources may arrive only in 2026, when the states will present the progress reports of their respective structural fiscal plans. In the meantime, Brussels is preparing the next step: on May 16, the spring economic forecasts will be published, which could already include a preliminary estimate of the volume of resources that can be activated in 2025. In an increasingly uncertain global scenario, the EU is therefore attempting a difficult balance between security needs and budgetary discipline. The safeguard clause, if well managed, could represent a turning point towards a more autonomous, coordinated and credible European defence.
Alessandro Fiorentino