EU Commission approves German long-term budget despite new debt
Brussels (dpa) –The European Commission on Tuesday backed Germany’s budget proposal for the years 2025-2031, despite plans for new debt to finance massive investments in defence, infrastructure and climate protection.
The green light will ease concerns that Berlin’s push to invest 500 billion Euro over the coming years could have legal consequences as European Union countries have to adhere to strict deficit and debt limits.
The Commission concluded that Germany is likely to breach the 3 percent deficit limit initially but is expected to be back on track by 2028. Germany’s debt burden is to ease again in the second half of the seven-year period.
The temporary breaches of the EU rules are not expected to trigger an excessive deficit procedure against Berlin, the Commission said.
Extra spending for military investments
The Commission also allowed Berlin to make use of a special rule that exempts some defence spending from the deficit requirements to quickly improve European defence capabilities and to deter Russia. Under this rule, capitals can spend an additional 1.5 percent of gross domestic product (GDP) on defence over four years without risking deficit proceedings.
Along with Germany, 15 other EU countries have already announced their intention to make use of that rule to buy new defence equipment.
Berlin’s Finance Ministry submitted its seven-year fiscal policy plan to Brussels in July, after the new German government took office in May.
EU countries are generally required to submit five-year plans, but under certain conditions they may also draw up longer-term proposals that give them more leeway in meeting the bloc’s deficit and debt ceilings.
The Commission approved the extension as the planned investments are in line with EU priorities and are expected to increase labour supply, reduce excessive bureaucratic burden and modernise public administration.
Germany’s long-term budget plans still have to be approved by EU member states, a step which is currently planned for October. (16 September)
