Latest news with #defence spending
Yahoo
4 days ago
- Business
- Yahoo
Germany unlikely to fall foul of EU deficit rules, official tells FT
VIENNA (Reuters) -The European Commission will probably not impose a so-called excessive deficit procedure on Germany for breaching the EU's budget deficit cap this year, Economic Commissioner Valdis Dombrovskis told the Financial Times. Germany's new conservative-led coalition government has said it does not expect a planned spending spree, including on defence, to be found in breach of European Union rules that cap budget deficits at 3% of gross domestic product. Berlin's budget deficit is expected to come in at 3.3% of GDP this year, but since defence spending fully accounts for the amount over 3%, Germany "is likely not to end up in (the) excessive deficit procedure", Dombrovskis was quoted as saying in the FT interview published on Sunday. An excessive deficit procedure involves the Commission and EU finance ministers setting a corrective course to bring a member state's deficit back within the 3% limit. A country's failure to do so can in principle eventually lead to a fine. "We have to see the execution, because it's close (but) if everything holds, then it should not be the case for this year's budget," Dombrovskis said, adding that a final assessment would take place in the spring when data for 2025 is available. Under the EU's new fiscal rules, which the previous, more fiscally conservative German government helped negotiate, member states can exclude some defence spending from their deficits.
CTV News
18-07-2025
- Business
- CTV News
CTV National News: Defence spending may not stop recession
CTV National News: Defence spending may not stop recession Analysts with Oxford Economics suggest Canada is headed for a recession, despite increasing defence spending. Judy Trinh looks at the numbers.
Irish Times
11-07-2025
- Business
- Irish Times
Growth in euro zone likely to stay moderate out to 2027
Growth in the euro area is likely to stay moderate out to 2027 as trade tensions and elevated uncertainty are expected to weigh on activity, despite some boost from higher defence and infrastructure spending, the International Monetary Fund (IMF) has said. The group said the geopolitical situation in Europe is expected to 'dampen sentiment' and 'weigh on investment and consumption', despite looser monetary policy and projected gains in real income. Headline inflation is projected to remain broadly at target from the second half of 2025, while core inflation will return to 2 per cent in 2026. Risks to growth are on the downside while they are two-sided for inflation. Trade policy uncertainty, potential tariff escalations, and ongoing geopolitical tensions 'may negatively impact' demand and growth more than previously anticipated. READ MORE These factors are expected to outweigh any positive effects of unanticipated fiscal easing, particularly if countries increase defence spending, the IMF said. Regarding inflation, lower-than-expected non-energy goods prices because of trade diversion, weaker-than-expected activity and wages, as well as the recent euro appreciation could result in inflation below the baseline. On the other hand, fiscal spending could turn out larger or more inflationary than in the baseline, while geopolitical tensions, supply chain disruptions, and tariff escalation could lead to higher import prices, and wage growth may not moderate as strongly as expected. In an increasingly challenging global environment, a 'comprehensive policy strategy' is needed for 'decisive EU-level actions' to boost Europe's growth potential and financial resilience, it continued. This includes reforms to strengthen the EU single market, enhance energy security, and orient the EU budget to invest in common public goods. Ensuring debt sustainability and securing financial and price stability were 'essential prerequisites' for the successful implementation of these reforms. The IMF said the banking system was adequately capitalised and liquid overall, while some banks would 'dip into their buffers' under stress. It identified financial stability risks stemming from interlinkages with non-bank financial institutions and called on the authorities to enhance data sharing, strengthen systemic risk monitoring, and conduct system-wide stress tests. While welcoming progress on several fronts, including the strengthening of banking supervision and introduction of the new Anti-Money Laundering Authority, fragmentation 'continues to hinder' the development of more resilient, deeper, and integrated euro area-wide financial markets. The IMF said that establishing arrangements for the Single Resolution Fund to offer guarantees – ideally supported by an EU fiscal backstop – was critical for enhancing the provision of central bank liquidity during bank resolutions and will boost the resilience of the euro area-wide financial system. It also said the activation of the national escape clause of the EU fiscal rules should be limited to the initial phase of scaling up defence spending and not to finance recurring spending over an extended period. Its directors concurred that non-defence net current expenditures should remain consistent with adopted medium-term fiscal plans and emphasised that it will be important to assess the impact of overall defence spending on debt sustainability on an ongoing basis.
