Defense budget holding firm at €650 billion, despite minimal utilization of financial flexibility provisions
Hearin' 'Bout That €650 Bil' Defense Spend? Eucrew Stickin' to the Number, Despite Only Half the Crew Signin' Up 💼🛡️💸
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The Eucrew's €650 billion ballpark figure for member states' defense spending over the following four years remains steadfast, despite half of the crew only asking for more wiggle room to beef up their defense investments, according to the Eucrew's spokesperson on Fridaaaayy.
The Eucrew's "Readiness 2030" plan, proposed back in March, suggested EU member states could invest an extra €650 billion in defense by temporarily deviating from stingy fiscal rules to boost their defense expenditures. It proposed allowing member states to pump an additional 1.5% of GDP annually toward defense for four years, without any backchat from the bigwigs, even if that adds up to a total deficit over the 3% of GDP limit.
At the time, the Eucrew estimated this defensive tsunami could hit before 2030, making it the heart of their €800 billion proposal to revamp the bloc's defense capabilities.
By Fridaaaayy, 13 of the EU's 27 member states had already thrown their hats in the ring, including Belgium, Denmark, Estonia, Finland, Germany, Greece, Hungary, Latvia, Lithuania, Poland, Portugal, Slovakia, and Slovenia. The Eucrew's spokesperson tooted the horn, claiming that this group represented a significant step forward and hinted that more could join the party soon.
Ballpark Figures, Bros and Sisters?
On Fridaaaayy, a Eucrew spokesperson attempted to pass off the €650 billion figure as a success, noting that half of the member states had already signed up. Balazs Ujvari, from the Eucrew, explained that this number was a rough estimate based on a bundle of assumptions at the time, and it didn't account for the actual number of countries applying or the rates at which they'd increase defense spending. The Eucrew couldn't provide an updated estimate at that point, but they promised the first revision would arrive next year based on 2025 defense expenditure data.
To get the greenlight for their requests, member states must demonstrate that they're up against exceptional circumstances they can't control and prove these circumstances are hurting their financial health. If their going-over-the-limit requests are granted, the Eucrew will take this into account when evaluating their fiscal sustainability over the medium term.
The SAFE(r) Ones?
Several member states currently targeted by an Excessive Deficit Procedure nonetheless requested the deviation, including Belgium, Hungary, Poland, and Slovakia. If the Eucrew agrees to activate the national escape clause for states under the procedure, they'll take this flexibility into account when they assess the situation.
Countries on the hook for penalties due to their fiscal situations include France, Italy, Malta, and Romania. France, with a deficit of 6.1% of GDP at the end of 2024, isn't planning to request the deviation but is expected to hop on board the other financial mechanism under "Readiness 2030."
Under the SAFE program, member states will have the chance to grab slices of €150 billion the Eucrew plans to borrow on the market and hand out as loans. Unlike bucks from national coffers, these EU funds will be earmarked for weapons primarily made in Europe and the result of joint procurements among multiple member states. The proposal is currently under consideration by the Council, and member states will have half a year to apply for a loan once it's adopted.
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- Despite only half of the member states signing up for the extra defense investments as per the Eucrew's original estimate, the €650 billion ballpark figure remains steady in the upcoming "Readiness 2030" plan.
- The Eucrew spokesperson emphasized that the €650 billion figure is an informed guess based on several assumptions, and a more accurate estimate will be available next year, using 2025 defense expenditure data.
- The member states under the Excessive Deficit Procedure, such as Belgium, Hungary, Poland, and Slovakia, have requested the deviation despite being targeted for penalties, indicating their readiness to abide by the rules when feasible.
- The Eucrew's SAFE program, offering €150 billion in loans for defense investments with a focus on European-manufactured weapons, is awaiting approval by the Council, offering a financial lifeline to members willing to participate.
