Latest news with #StabilityandGrowthPact
Euronews
08-07-2025
- Business
- Euronews
15 EU countries allowed to violate deficit limit for defence spending
EU finance ministers on Tuesday granted 15 member states the right to deviate from the bloc's fiscal rules in order to massively ramp up defence spending. 'At this critical juncture, investment in our defence capabilities must remain our top priority," Stephanie Lose, Economic Affairs Minister for Denmark, which currently holds the rotating presidency of the Council of the EU, said in a statement. "Today's activation of the national escape clause will allow member states to ramp up defence spending while maintaining sustainable public finances," she added. The countries that have seen their request to activate the national escape clause in the Stability and Growth Pact (SGP) approved are Belgium, Croatia, Czechia, Denmark, Estonia, Finland, Greece, Hungary, Latvia, Lithuania, Poland, Portugal, Slovakia and Slovenia. Germany has also asked to benefit from more lenient fiscal rules for defence but the Council of the EU is not yet in a position to make a decision as Berlin, whose new government took office in April, has not submitted its medium-term fiscal-structural plan outlining the priority public investments and reforms for the coming years. They're expected to do so before the end of the month, with their request to activate the national escape clause likely to be voted on in September. A 2030 deadline The measure allows those member states to boost defence spending by 1.5% of gross domestic product (GDP) annually for four years without consequences even if this brings their total deficit over the 3% of GDP limit mandated in the SGP. It is part of the EU's €800 billion 'Readiness 2030' plan to ramp up defence expenditures over the coming four years with the European Commission previously estimating it could see up to €650 billion poured into the sector. The 16 EU countries that will benefit from more lenient fiscal rules are also members of the NATO military alliance that agreed late last month to more than double its defence spending target to 5% of GDP by 2035. The new target represents a huge ask for some EU allies with a few - Belgium, Italy, Hungary, Romania, France, Poland, Slovakia - already targeted by Brussels with an Excessive Deficit Procedure due to the poor state of their public finances. Neutral Malta is also being closely monitored under the same procedure. While deviating from the fiscal rules for defence will not see them penalised, these eight countries "remain bound by the budgetary rules and must remain committed to the implementation of the revised economic governance framework irrespective of the clause's activation" for all other expenses, the statement from the Council also said. The 27 EU member states are meanwhile currently evaluating whether to participate in SAFE, the other major financial pillar included in the plan to rearm the EU. They're expected to pitch in their projects and requests for funding towards the end of the month with the Commission set to start raising the €150 billion for the scheme on the markets at the beginning of 2026. The new EU arms race comes amid warnings by intelligence agencies that Russia could be in a position to attack another European country towards the end of the decade.
Yahoo
04-06-2025
- Business
- Yahoo
European Commission gives fiscal verdicts for member states, with defence looming large
The European Commission delivered its Spring Package on Wednesday, an economic update that feeds into its five-year plan to boost the EU's resilience and includes country-specific recommendations. While fiscal responsibility remains important, the Commission underlined a need to boost defence capabilities. This comes not only in the wake of Russia's invasion of Ukraine, but also increased hostility from Washington. US President Donald Trump has continually warned Europe that it needs to increase financial contributions to guarantee its own security. 'Amid rising security challenges, the national escape clause (NEC) under the Stability and Growth Pact is also drawn upon for the first time,' said the Commission. The NEC allows member states to temporarily exceed maximum growth rates of net expenditure to boost defence financing. A total of 16 countries asked the Commission to implement this mechanism, specifically: Belgium, Bulgaria, Croatia, Czechia, Denmark, Estonia, Finland, Germany, Greece, Hungary, Latvia, Lithuania, Poland, Portugal, Slovakia and Slovenia. Related MEPs oppose Commission's overhaul of EU budget after 2027 'Choices need to be made': EU Commission to propose simpler, more focused long-term budget Wednesday's Package also outlined country-specific recommendations to ensure that EU members are on track to boost their economic standing. 'Member States are encouraged to boost their competitiveness by closing the innovation gap, advancing decarbonisation in line with the Clean Industrial Deal, reducing excessive dependencies, increasing security and resilience, including by building up defence capabilities and promoting skills and quality jobs while ensuring social fairness,' said the Commission. While 12 member states are considered to be 'compliant' in terms of medium-term spending plans, the Commission flagged Cyprus, Ireland, Luxembourg and the Netherlands as countries that could overshoot fiscal limits. Portugal and Spain were considered to be 'broadly compliant'. The Commission noted that Austria, on the other hand, will face a formal procedure to bring its deficit back under control. Romania was another member state rebuked in the report. 'Romania's net expenditure growth is significantly above the ceiling set by its corrective path, posing clear risks to correcting its excessive deficit by 2030,' said the Commission. 'The Commission is therefore recommending that the Council adopt a decision that establishes Romania has not taken effective action.'
Euronews
04-06-2025
- Automotive
- Euronews
European Commission gives fiscal verdicts for member states
The European Commission delivered its Spring Package on Wednesday, an economic update that feeds into its five-year plan to boost the EU's resilience and includes country-specific recommendations. While fiscal responsibility remains important, the Commission underlined a need to boost defence capabilities. This comes not only in the wake of Russia's invasion of Ukraine, but also increased hostility from Washington. US President Donald Trump has continually warned Europe that it needs to increase financial contributions to guarantee its own security. 'Amid rising security challenges, the national escape clause (NEC) under the Stability and Growth Pact is also drawn upon for the first time,' said the Commission. The NEC allows member states to temporarily exceed maximum growth rates of net expenditure to boost defence financing. A total of 16 countries asked the Commission to implement this mechanism, specifically: Belgium, Bulgaria, Croatia, Czechia, Denmark, Estonia, Finland, Germany, Greece, Hungary, Latvia, Lithuania, Poland, Portugal, Slovakia and Slovenia. Wednesday's Package also outlined country-specific recommendations to ensure that EU members are on track to boost their economic standing. 'Member States are encouraged to boost their competitiveness by closing the innovation gap, advancing decarbonisation in line with the Clean Industrial Deal, reducing excessive dependencies, increasing security and resilience, including by building up defence capabilities and promoting skills and quality jobs while ensuring social fairness,' said the Commission. While 12 member states are considered to be 'compliant' in terms of medium-term spending plans, the Commission flagged Cyprus, Ireland, Luxembourg and the Netherlands as countries that could overshoot fiscal limits. Portugal and Spain were considered to be 'broadly compliant'. The Commission noted that Austria, on the other hand, will face a formal procedure to bring its deficit back under control. Romania was another member state rebuked in the report. 'Romania's net expenditure growth is significantly above the ceiling set by its corrective path, posing clear risks to correcting its excessive deficit by 2030,' said the Commission. 'The Commission is therefore recommending that the Council adopt a decision that establishes Romania has not taken effective action.' Volvo Cars announced worldwide sales of 59,822 cars in May, which was a decrease of 12% compared with the same month in 2024. This was partly due to the company struggling with recently imposed US automotive tariffs. Electrified models — both plug-in hybrids and fully electric vehicles — made up 44% of all car sales in May. This was a fall from 66% in May 2024. While fully electric models made up 21% of all May sales, plug-in hybrid models accounted for 23%. The best-selling model in May was the XC60, which sold 19,408 units — a slight dip from the 20,507 units sold in the same month last year. The XC40/EX40 model took second place, with 14,892 units sold — an increase on May 2024's 13,640 units. The third best-selling model was the XC90 with 8,794 units sold in May 2025. By contrast, 9,072 units of this model were sold in May 2024. As of December 2024, Volvo Cars had about 42,600 full-time employees, with its head office based in Gothenburg, Sweden, and production plants across the US, Belgium and in China. Volvo Cars also recently announced that it would be slashing 3,000 jobs, as part of wide-ranging cost-cutting measures, which are expected to save the company about SEK 18 billion (€1.6bn). These layoffs will primarily affect office-based positions in Sweden, which make up around 15% of Volvo Cars' white collar workforce. Out of these 3,000 layoffs, around 1,000 will be consultant positions. Earlier in May, the company laid off 5% of its staff in its Ridgeland, South Carolina facility, which accounted for 125 roles. Volvo Cars said in a press release about the redundancies on its website: 'These structural changes are necessary for Volvo Cars to deliver on its long-term strategy, strengthening its foundations for profitable growth. 'Volvo Cars remains firm on its ambition of becoming a fully electric car company, as fully electric is the fastest growing market segment and Volvo Cars is a leader in this transition.' Back in 2021, the company revealed that all its models would be electric by the end of the decade. However, it has pushed back this goal, citing rising uncertainties due to electric vehicle (EV) tariffs in many markets. Apart from tariffs, slower European sales and the higher cost of materials have also affected several major car companies in Europe. Nissan, Ford, General Motors, Volkswagen, Tesla and Stellantis have all announced layoffs in the last few months, as car companies scramble to become more efficient and adaptive in the current uncertain economic environment.
Reuters
28-04-2025
- Business
- Reuters
Germany asks for EU leeway on defence spending, letter shows
BERLIN, April 28 (Reuters) - Germany has asked the European Commission for an exemption from European Union borrowing limits in order to increase defence spending in the coming years, according to a letter from German Finance Minister Joerg Kukies seen by Reuters on Monday. Kukies told Reuters in an interview on Friday that Germany was likely to request the exemption. The European Commission has proposed allowing member states to raise defence spending by 1.5% of gross domestic product (GDP) each year for four years without any disciplinary steps that would normally kick in once a deficit is above 3% of GDP. "We see the Commission's proposal for a coordinated activation of the National Escape Clause of the Stability and Growth Pact as an important complementary measure to enable increased national defence spending while safeguarding fiscal sustainability," Kukies said in the letter. The Commission had hoped the proposal would be widely taken up by the 27 EU countries and help boost EU defence investment by 650 billion euros over the next four years to deter potential Russian aggression. However, only Portugal and Poland had so far signalled interest in the exemption. EU countries with high national debt are sceptical of borrowing more to spend on defence. Germany's request may encourage other countries to follow the path, although its government debt ratio of 62.5% of GDP in 2024 is much lower than that of Italy, France and Spain, which are all above 100% and reluctant to apply for the exemption.
The Star
22-04-2025
- Business
- The Star
Finland's public finances deteriorated in 2024, breaching EU thresholds
HELSINKI, April 22 (XINHUA) -- Finland's general government finances deteriorated in 2024, breaching European Union (EU) limits on deficit and debt, Statistics Finland said in a press release published on Tuesday. According to preliminary data, Finland's general government deficit stood at 4.4 percent of gross domestic product (GDP) in 2024, while debt under the excessive deficit procedure (EDP) reached 82.1 percent of GDP by the end of 2024. Both figures exceeded the EU thresholds of three percent for deficits and 60 percent for debt, as set out in the bloc's Stability and Growth Pact. The general government deficit - or net borrowing - amounted to 12.2 billion euros (13.05 billion U.S. dollars) in 2024, marking a year-on-year deterioration of 4 billion euros. Most of the debt increase stemmed from the central government, which added 14 billion euros in new debt, while local government debt grew by 1.8 billion euros. To balance the public finances, the current government, led by Prime Minister Petteri Orpo, has introduced spending cuts and tax rises since taking office in June 2023. The government has pledged to save approximately 9 billion euros with fiscal consolidation measures during its term. So far, the consolidation measures have included cuts to healthcare and education budgets and increasing the standard value-added tax rate to 25.5 percent from 24 percent. (1 euro = 1.07 U.S. dollars)
