“Flexibility window” for Greece (as well as 16 EU Member States), the approval of the latest Ecofin escape clause for defense spending opens. The decision allows Create additional equipment expenditure up to 1.5% of GDPwhich will not burden the country’s deficit (however, will be recorded in public debt).

The most important is the change of the base year for military spending, which has been transferred to 2024 by 2021. If it was maintained as a base year in 2021 – with Greek defense spending exceeding 3% of GDP – there would be no margin of flexibility.

With the new base, the increase of 0.3 percentage points of GDP creates Financial space of approximately 500m euros. An amount, which is expected to go to the “euro” of the 1 billion euros created by the retention of primary costs and additional revenue from tax evasion measures.

This is how a “package” of lightenings totaling 1.5 billion euros that the prime minister at the TIF will have in his “suitcase” next September.

According to the Commission, The escape clause will apply from 2025 to 2028with the possibility of extension for another year, and will be accompanied by an annual application check.

For the Greecethe forecast is tied to the new 12-year long-term defense equipment program (2025-2036), which provides for costs from 2.2% of GDP in 2024, to 2.3% of GDP in 2025 and to 2.5% of GDP in 2026.

Also for our country, the European Commission estimates that incidence by utilizing the escape clause will be 1.2% of GDP in deficit and 1.8% of GDP in debt by 2028. According to the Commission’s recommendations, Greece should proceed with annual fiscal interventions of 0.2% of GDP (EUR 500 million) for four years, or alternatively, 0.1% for seven years, if it is selected longer in the next mid -term program.

It is noted that the evaluation of the Member States was made in two circles: the first, covering the period 2025-2028, concerns the activation of the clause and temporary relaxation. The second, starting in 2029, focuses on restoring fiscal balances, with stricter targets for the budget deficit and public debt.

Indeed, the European Commission warns that the escape clause is not a “white check”. He points out that it is a temporary relaxation, insisting on maintaining fiscal sustainability, in order to avoid derailment of deficit and debt from 2029 onwards. And it sounds the “danger” of the Member States to be ready, if required, for the necessary adjustments, in order not to shake the long-term fiscal stability after the end of the flexibility period.