Opinion & Analysis

Navigating the Evolution of EU Fiscal Rules: A Possible Special Status for Defence Spending?

Amid a paradigm shift in EU economic governance, a draft compromise seen by Euractiv reveals that, under the new Economic Governance Review (EGR), defence spending might be granted special status within European Union (EU) fiscal rules (Pugnet &Allenbach-Ammann, 2023). According to Euractiv, this document, tabled by the Spanish presidency of the EU Council on 3 November 2023, seeks to stimulate member state investment in defence. It is also part of a grand effort to overhaul current EU debt and deficit reduction rules, which were suspended for four years in order to allow increased spending and will be returning in full force in 2024 (Leali & Smith-Meyer, 2023).

“We need fiscal rules that are fit for the challenges of this decade” (European Commission, 2023): so said President of the European Commission Ursula von der Leyen on 26 April 2023, following the presentation of the most substantial reform proposals to the Stability Pact since the 2008 economic and financial crisis’ aftermath (European Commission, 2023). The April and November proposals are both part of a comprehensive effort to reform the EU’s economic governance rules, which is set to come to a head on 8 December 2023, when the European Council “will seek a general approach on the proposed reform of the economic governance framework [and ministers] will adopt implementing decisions approving modified recovery and resilience plans, submitted by some member states” (European Council, 2023).

About the Author

Matilde Castoldi is a Legal Researcher at Finabel.

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