On Tuesday 11 March, the Polish Minister of Finance, Andrzej Dománski, announced an agreement between EU Member States on the definition to be used to identify the type of military expenditure that will fall within the scope of the ‘national escape clause’ of the Stability and Growth Pact (see EUROPE 13596/13).
“We don’t want to manipulate definitions. We want to use the broad one. The definition of the classification of functions of public administrations [COFOG] is the one we’ll use”, stated Mr Dománski at the end of the Ecofin Council. He also indicated that “2021” will be the reference year to be taken into account when assessing the increase in military spending by means of the flexibility of the budgetary rules.
According to a source from the Polish Presidency of the Council, the COFOG definition used by the statistical office of the EU (Eurostat) covers expenditure on military equipment, infrastructure for military use, costs related to military personnel and other expenditure on production capacity, including public or private factories and dual-use infrastructure. Military assistance missions, hospitals, military schools and pensions of military personnel are not included.
The European Commissioner for the Economy and Productivity, Valdis Dombrovskis, saw several “advantages” in using this definition, which is “broadly in line” with that used by NATO. He noted the willingness of many Member States to act in a coordinated manner and to regulate the use of the ‘national escape clause’ (increased annual expenditure limited to 1.5% of GDP over four years) in order to preserve the sustainability of public finances.
The European Commission could present its guidelines as early as next week, ahead of the European summit on Thursday 20 and Friday 21 March. (Original version in French by Mathieu Bion)