Economic governance: Council approves flexibility for Austria to increase defence spending 12:25 The Council today activated the national escape clause for Austria under the[...]

The Council today activated the national escape clause (NEC) under the stability and growth pact (SGP) for Austria. The measure will help Austria transition to higher defence spending at national level without putting its debt sustainability at risk.

The clause covers a period of four years and a maximum of 1.5% of GDP in flexibility. The flexibility provided by the national escape clause will not have any effect on Austria's ongoing commitment to address its ongoing excessive deficit, provided that the flexibility is used for increased defence spending.

For all other expenses, Austria remains bound by the budgetary rules and must remain committed to the implementation of the revised economic governance framework irrespective of the clause's activation.

Background

The NEC allows a member state to temporarily deviate from budgetary requirements in response to exceptional circumstances outside their control, while ensuring debt sustainability.

The reformed EU economic governance framework allows member states to make use of this flexibility by temporarily increasing public spending or running higher deficits without being considered in breach of the fiscal rules set out in the stability and growth pact.

The EU has activated the national escape clause to respond effectively to heightened geopolitical tensions which pose a significant threat to European security. This threat creates a growing need to ramp up the European defence industry.

16 other EU member states - Belgium, Bulgaria, Croatia, Czechia, Denmark, Estonia, Finland, Germany, Greece, Hungary, Latvia, Lithuania, Poland, Portugal, Slovakia and Slovenia - have also had their requests to activate the national escape clause approved.

• Council recommendation endorsing activating the national escape clause for Austria
• National escape clause for defence expenditure (press release, 8 July 2025)
• Economic governance framework (background information)
• Boosting European defence expenditure (background information)