Germany, once a staunch advocate for strict fiscal discipline, is now pushing for more flexibility in the EU’s fiscal rules to increase defense spending.
Following the EU’s adoption of new fiscal regulations last year, which were designed after intense negotiations, Germany argues that the current provisions aren’t sufficient to address Europe’s growing security challenges.
The European Commission has proposed an emergency clause to allow a temporary increase in defense spending by up to 1.5% of GDP annually over four years. However, Germany believes this is inadequate for long-term security needs and calls for broader fiscal reforms. The shift in Germany’s stance marks a stark contrast to its past opposition to exemptions for defense spending.
In a historic move, Germany’s CDU and SPD have agreed to reform the country’s debt brake to boost defense investments, anticipating €400-500 billion in spending. This is much higher than the EU’s proposed €650 billion for the entire bloc.
Germany’s new approach is driven by increasing security concerns and shifting geopolitical dynamics, including doubts about relying on the U.S. under Trump. EU leaders are expected to discuss these issues in an upcoming meeting.
