Germany has formally requested an exemption from the European Union’s borrowing rules to enable higher defense spending in the coming years.
According to a letter from Germany’s Finance Minister Jörg Kukies, reviewed by Reuters on Monday, Berlin is asking for greater freedom of action under EU fiscal constraints.
The European Commission has proposed a framework allowing member states to raise defense expenditures by up to 1.5% of GDP annually over four years, without triggering disciplinary procedures normally applied when deficits exceed 3% of GDP.
“We view the Commission’s proposal for the coordinated application of the national escape clause under the Stability and Growth Pact as an important additional measure that would allow for an increase in national defense spending while ensuring financial sustainability,” Kukies wrote.
The Commission aims for widespread backing of the initiative among the 27 EU member states, hoping to unlock €650 billion in defense investments over the next four years as a counter to potential threats from Russia.
So far, only Portugal and Poland have signaled interest in using the special exemption. Several EU countries with elevated public debt levels remain cautious about expanding borrowing for military purposes.
Germany’s move could pave the way for broader participation, though its own debt-to-GDP ratio is forecasted at 62.5% for 2024 — much lower than the over 100% debt levels seen in Italy, France, and Spain, where governments remain hesitant about taking advantage of the proposed flexibility.
