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The bloc’s deficit regulations should forgo defense spending – POLITICO

Governments can spend more on defense without worrying about the bloc’s budget deficit cap, according to nine EU countries – mostly from the East.

As Russia’s invasion of Ukraine was in full swing, representatives from Italy, Estonia, Greece, Hungary, Latvia, Lithuania, Poland, Romania and Slovenia called for defense spending to be abandoned last week, four treasury officials confirmed Monday.

The push comes ahead of an informal meeting of EU leaders this week in Versailles, France, where they are expected to talk about reducing the bloc’s energy dependence on Russia, strengthening defense defend and strengthen the economic foundations of the bloc.

EU ambassadors are currently working on a statement that leaders will publish after the informal summit. Officials said there was no direct reference to EU deficit regulations.

Normally, EU treasuries are forced to keep their budget deficits below 3% of economic output while trying to limit their public debt to 60%. Brussels has put those rules in place during the pandemic to ensure governments can cope with the outbreak without fear of sanctions by the European Commission.

The so-called Stability and Growth Pact is expected to come into force from January next year. But the Commission has hinted that the rules could be further delayed amid uncertainty stemming from the war in Ukraine – and the potential impact of the war on the EU’s economy could be lingering. that pause.

War aside, the SGP can change for other reasons. Indebted nations in the South are pushing for deficit waivers for green investments to ensure they can weather climate change and tackle their debt burden at the same time.

Although war also favors waivers for defense spending, that effort is likely to face resistance from countries such as the Netherlands and Denmark, officials warn.

This article is part of POLITICOPremium policy services of: Financial Services Pro. From the euro area, banking union, CMU, etc., our specialist journalists keep you up to date with the topics driving the Financial Services agenda. Email [email protected] for a free trial.

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