(1)

Regulation (EU) 2024/1263 on the effective coordination of economic policies and on multilateral budgetary surveillance, together with the amended Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure (2), and the amended Council Directive 2011/85/EU on requirements for budgetary frameworks of the Member States (3) are the core elements of the reformed EU economic governance framework. The framework aims at promoting sound and sustainable public finances, and sustainable and inclusive growth and resilience through reforms and investments, and preventing excessive government deficits. It promotes national ownership and has a medium-term focus, combined with an effective and coherent enforcement of the rules.

(2)

The maximum growth rates of net expenditure as set in a Council recommendation in accordance with Articles 17(1), 19 or 20 of Regulation (EU) 2024/1263 are the single operational reference for the annual fiscal surveillance of each Member State and are at the centre of the new economic governance framework. The maximum growth rates of net expenditure as set by that Council Recommendation establish a budgetary constraint for four or five years, which is based on an adjustment period of four years that can be extended by an additional period of up to three years.

(3)

The framework provides for flexibility in the application of the rules in the event of exceptional circumstances outside the control of Member States that have a major impact on the public finances, in accordance with Article 26 of Regulation (EU) 2024/1263. In the latter case, following a request from a Member State and on a recommendation by the Commission based on its analysis, the Council may within four weeks of the Commission recommendation adopt a recommendation allowing a Member State to deviate from its maximum growth rates of net expenditure as set by the Council, where (i) exceptional circumstances outside the control of the Member State, (ii) have a major impact on the public finances of the Member State concerned, and (iii) provided that such deviation does not endanger fiscal sustainability over the medium term. The Council is to specify a time limit for such deviation.

(4)

The Heads of State or Government, meeting in Versailles on 10-11 March 2022, committed to bolster European defence capabilities in light of Russia's military aggression against Ukraine. These aims were reiterated in the Strategic Compass for Security and Defence. In its Conclusions on European defence of 6 March 2025, the European Council welcomed the intention of the Commission to recommend the activation, in a coordinated manner, of the national escape clause under the Stability and Growth Pact as an immediate measure.

(5)

In its Communication of 19 March 2025 (4), the Commission has invited all Member States to make use of the flexibility provided by the national escape clause in a coordinated manner with a view to maximising the impact on the EU's defence capabilities. This flexibility aims at facilitating the transition to higher levels of defence spending provided that it does not endanger fiscal sustainability over the medium term. That Communication describes that the activation of the national escape clause would allow Member States to deviate from the maximum growth rates of net expenditure as set by the Council when endorsing the medium-term fiscal-structural plans or when establishing the corrective paths under the excessive deficit procedure, to the extent that this deviation is justified by an increase in defence spending relative to the reference year, and that the annual excess through 2028 will not exceed 1,5 % of GDP. Increases beyond that amount would be subject to the normal assessments of compliance. Such a maximum is necessary to ensure that fiscal sustainability is not endangered, while allowing all Member States to benefit from the flexibility as they move towards a higher level of defence expenditure. The exact amounts will be determined when outturn data become available, to ensure that the additional flexibility is used only for its intended purpose.

(6)

The Council Recommendation of 21 January 2025 (5) endorsed the net expenditure path of Spain.

(7)

On 13 April 2026, Spain submitted a request to the Council and the Commission, to activate the national escape clause.

(8)

In its request, Spain underlines the repercussions of Russia's continued war of aggression against Ukraine, which requires a significant increase of defence spending. This situation is an exceptional circumstance outside the control of each Member State. In addition, Spain highlights the need for Europe to become more sovereign, responsible for its own defence and security and better equipped to act and deal autonomously with immediate and future challenges and threats. In this context, Spain also points to the swift implementation in 2025 of the Industrial and Technological Plan for Security and Defence, focused on the modernization of armed force equipment and the development of new technologies. In light of this, Spain is requesting the activation of the national escape clause for the period from 2025 to 2028, in line with the other Member States for which the Council has already activated the national escape clause for defence.

(9)

In its request, Spain reports data on total defence expenditure until 2025 (Table 1). In addition, Spain expresses its committment to a level of defence and security spending compatible with the delivery of the NATO Capability targets for the years to come. Therefore, the increase in defence expenditure has a major impact on the public finances of Spain.

Table 1: Total defence spending in Spain

(10)

Spain estimates that the increase in total defence expenditure as a ratio to GDP from 2024 to 2025 has been in the order of 0,1 percentage point and therefore contributes to deteriorating the government balance and increasing government debt.

(11)

All else being equal, an increase in expenditure over the period covered by the national escape clause will lead to higher government debt and a higher deficit by the end of that period. Indicative projections run by the Commission and assuming, by 2028, a linear uptake of the full increase in government expenditure allowed by this recommendation suggest that the deficit-to-GDP ratio and debt-to-GDP ratio in 2028 would be 1,1 pps. and 1,5 pps. higher, respectively, than if net expenditure grew in line with the path set by Council Recommendation C/2025/643. This would likely require an additional fiscal adjustment after the period of activation of the national escape clause in order to meet the requirements of the fiscal framework, including to ensure that the debt ratio is put or remains on a plausibly downward path, or stays at prudent levels below 60 % of GDP over the medium term, and that the deficit stays or is brought below 3 % of GDP and maintained below the reference value over the medium term. Spain acknowledges that, going forward, structurally higher defence expenditure may require policies to preserve fiscal sustainability and compliance with the fiscal rules over the medium term. The limited projected increase in deficit and debt levels caused by the national escape clause, together with Spain's commitment to implementing the necessary adjustment to fulfil all the requirements of the fiscal framework in the next plan, ensures that fiscal sustainability is preserved over the medium term.

(12)

General government defence expenditure data are compiled and released by the national statistical authorities and Eurostat according to the International Classification of the Functions of Government (COFOG) (6) in the framework of the European System of National Accounts (ESA2010) (7). These data are appropriate to assess the impact of defence spending on government deficit, debt and net expenditure, and related concepts. Eurostat, in close cooperation with the national statistical authorities, are establishing a data collection process. The starting point should be COFOG defence categories, while also considering the NATO definition and retaining the possibility to address anomalies that might be attributable to differences in the respective annual reporting systems. The data collection process needs to be aligned with reporting requirements established by Council Regulation (EC) No 479/2009 (8).

(13)

Moreover, for some of the contracts for military equipment signed during the period of activation of the national escape clause, delivery may occur at a later stage, therefore impacting public finances only after the period of activation of the clause. To cater for this eventuality, the flexibility granted under the national escape clause should also apply to defence expenditure linked to such later delivery, provided that the corresponding contracts were signed during the period of activation of the clause and that this delayed defence spendingremains within the overall cap mentioned above.

(14)

The expenditure financed by loans provided under Council Regulation (EU) 2025/1106 of 27 May 2025 establishing the Security Action for Europe (SAFE) through the Reinforcement of the European Defence Industry Instrument (9), would automatically benefit from the above flexibility. To this end, Member States would report to Eurostat all defence-related expenditures made under the SAFE Instrument under the categories ‘defence products’ and ‘other products for defence purpose’ as defined in Regulation (EU) 2025/1106.

(15)

This recommendation does not modify the definitions of government deficit, debt and net expenditure, and related concepts. Data based on these concepts are to be compiled and reported by Spain in accordance with Regulation (EU) 2024/1263, Regulation (EC) No 479/2009 and Regulation (EU) No 549/2013.