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EU defence spending hikes need to fit with budget stability, ECB's VP says
Published by Global Banking & Finance Review®
Posted on March 19, 2025
2 min readLast updated: January 24, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on March 19, 2025
2 min readLast updated: January 24, 2026
EU plans to boost defence spending while maintaining budget stability, with flexible fiscal rules allowing a 1.5% GDP increase annually.
MADRID (Reuters) - European Central Bank Vice President Luis de Guindos cautioned on Wednesday that while defence spending increases across the European Union were the "number one priority", there was still a need to guarantee budget stability in line with the bloc's fiscal rules.
EU countries are looking to boost defence spending by at least 800 billion euros ($873 billion) over four years after U.S. President Donald Trump's policies regarding the war in Ukraine raised doubts about Washington's commitment to European allies.
"The fundamental objective of this whole process has to be the commitment to maintain the basic parameters of budgetary stability in the coming years," De Guindos told a financial event in Madrid.
Earlier this month, EU finance ministers backed a proposal to use the flexibility in the bloc's revised fiscal rules to spend more on defence without triggering disciplinary steps from Brussels for excessive borrowing.
The European Commission has proposed allowing each member state to raise defence spending by 1.5% of gross domestic product a year, for four years, without any disciplinary steps that would normally kick in once a government deficit is above 3% of GDP.
($1 = 0.9164 euros)
(Reporting by David Latona; Editing by Inti Landauro and Andrei Khalip)
The article discusses the EU's plan to increase defence spending while ensuring budget stability, as emphasized by ECB's VP.
The increase is in response to doubts about U.S. commitment to European allies, especially after policies regarding the Ukraine war.
The EU plans to use flexibility in fiscal rules, allowing a 1.5% GDP increase in defence spending without triggering disciplinary actions.
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