The Polish government decided to usage the alleged national exit clause, allowing a temporary departure from EU recommendations on the way of public spending. The aim is to keep increased investment in defence, which, in the view of the European Commission, should become a permanent part of associate States' budgets in consequence to the war in Ukraine.
EU incentive for joint action
In mid-March, the European Commission officially encouraged associate States to coordinate their request for a national exit clause (NEC - National escape clause). Exceptional circumstances, specified as Russian aggression against Ukraine and the expanding safety threats in the region, are to justify, according to the EC, a more flexible approach to EU fiscal rules.
The national clause allows the Ecofin Council's recommended expenditure way to be exceeded, provided that this increase only concerns defence expenditure and does not exceed 1.5% of GDP.
Poland already among the applicants
The Ministry of Finance informed that Poland had submitted an appropriate application before the expiry of the recommended deadline. According to the estimates of the Ministry, the increase in defence spending in terms of GDP between 2024 and 2025 will be 1.1% and 1.3% respectively compared to 2021. In the following years, expenditure is to stay high.
It has been stressed that, despite the temporary loosening of fiscal rigors, Poland will proceed to be subject to EU general economical governance rules.
Evaluation of proposals and subsequent steps
Although the European Commission has suggested that countries apply by the end of April, this deadline is not binding. Applications submitted by this date, including Poland, will be assessed by the EC by 4 June. On this basis, the Ecofin Council will take a decision on 8 July.
The aim of joint action is not only to keep national defence capabilities, but besides to strengthen the European Union as a full in the context of military readiness and improvement of the arms industry.
Poland's request to usage the national exit clause is part of a broader EU strategy for adapting to a deteriorating safety environment. Higher defence spending is intended not only to supply better protection for citizens but besides for the financial stableness of associate States in the longer term. We are ahead of the key weeks that will find the future of this mechanics in the context of EU fiscal policy.
