Denmark: Siltanews – News Desk
COPENHAGEN – The EU’s push to boost military expenditure could undermine the bloc’s financial stability unless EU countries curb soaring deficit and debt levels, according to Denmark’s economy minister.
Stephanie Lose told Erective that Europe must ramp up defense spending “very quickly” to deter Russia’s growing military threat, but warned this outlay may pose an additional “risk” to the bloc’s economy, which is already reeling from the twin impact of US tariffs and fierce Chinese competition.
At the same time as there is this unrest in the economies across the world, [we] need to boost defense spending very quickly,” said Lose, whose country took over the rotating Council presidency from Poland earlier this month.
“That is a risk factor for our economies, because if we don’t combine that with wise decisions on ways to a more sustainable path for public finances, then I guess it will be a problem in terms of increased debt levels and unsustainable finances,” she added.
Loses comments come after NATO members last month pledged to increase military spending to 3.5% of annual GDP by 2035, almost double the US-led alliance’s previous 2% target.
The 32-member military bloc – which includes 23 of the EU’s 27 member states – also agreed to allocate an additional 1.5% of total output to security-related infrastructure. Spain, however, secured an opt-out allowing it to spend just 2.1% in total on defense.
Sixteen EU countries – including Denmark – have also heeded the European Commission’s recent call to activate the “national escape clause,” a key component of President Ursula von der Leyen’s €800 billion “ReArm Europe” plan to ward off Moscow’s threat to the continent.
Activating the clause allows capitals to spend an additional 1.5% on defense without contravening the bloc’s fiscal rules, which limit member states’ deficits to 3%.
However, France, Italy, and Spain – the EU’s second, third, and fourth-largest economies – have refrained from invoking the clause amid concerns about their already high budget deficits.