EU Countries Face Financial Risks if Defense Spending Rises
(MENAFN) European Union nations could encounter “increased debt levels and unsustainable finances” if they accelerate their defense expenditures too quickly, cautioned Danish Economy Minister Stephanie Lose.
Both EU and NATO member states are advocating for massive investments amounting to billions of euros in military personnel and armaments.
Last month, NATO leaders consented to raising the defense spending benchmark from 2 percent to 5 percent of GDP, designating 3.5 percent explicitly for military purposes, while the remaining funds would support broader security-related initiatives.
Prior to this, Brussels introduced the EURO800 billion (USD940 billion) ‘ReArm Europe’ strategy.
Denmark is among a dozen EU countries utilizing a special ‘national escape clause’ that permits them to bypass the EU’s fiscal deficit regulations when borrowing specifically for defense activities.
In an interview published on Monday, Lose expressed understanding for nations like France and Italy choosing not to apply this clause.
She remarked, “It’s good if you adhere to sound public finances... if it means that they’re exploring ways to fulfill the 3.5% NATO goal without being on an unsustainable path.”
However, she added that if this hesitation reflects limited capacity to increase defense budgets, “then it’s, of course, a problem.”
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