Twelve European Union countries have requested activation of the “national escape clause” from EU deficit rules in order to boost their defence spending, the European Commission said.
The EC proposed on April 30 to allow EU member states to raise defence spending by 1.5 per cent of gross domestic product each year for four years without any disciplinary steps that would normally kick in once a deficit is more than 3 per cent of GDP.
The announcement came as the 20 nations sharing the euro currency saw their economy expand by 0.4 per cent in the first quarter, beating expectations for 0.2 per cent, driven by quick growth in Spain, Eurostat data showed onn the same day.
“Well, that was a relief,” HSBC economic Fabio Balboni said. “Private consumption is now – finally – rising broadly in line with real wages. In addition, investment is also showing signs of life, likely on the back of faster Next Generation EU implementation and lower borrowing costs for firms.”
Although Europe’s promising growth was likely to be temporary, the bloc well-outperformed the US, which contracted in Q1, weighed down by a deluge of goods imported by businesses eager to avoid higher costs.
In a statement regarding the euro members’ national escape-clause petition, the EC said Belgium, Denmark, Estonia, Finland, Germany, Greece, Hungary, Latvia, Poland, Portugal, Slovakia and Slovenia had made the requests and that additional ones were expected at a later stage.
A spokesperson for the Polish presidency of the Council of the EU said that while 12 countries had already applied, four more “will do so shortly.”
The EC will now assess the requests.
“The Commission will continue to ensure that this flexibility is coordinated and helps EU countries to transit towards higher defence budgets while preserving sound budget policies,” said Valdis Dombrovskis, the European Commissioner for Trade.
