Italy Eyes €12 Billion Boost to Defense Spending Using EU Flexibility Clause
Italy may invoke the EU’s new defense flexibility clause to unlock €12 billion in spending, part of its effort to reach NATO’s 5% target without breaching deficit rules.
Rome — Italy is preparing to activate an EU-approved fiscal mechanism that would allow it to inject an additional €12 billion into its defense budget without breaching EU deficit limits.
The move comes as Rome seeks to accelerate progress toward NATO’s long-term defense spending target of 5% of GDP by 2035. The so-called National Escape Clause (NEC)—introduced under the EU’s ReArm initiative—permits member states to temporarily exclude defense expenditures from deficit calculations.
Italy has already requested €14.9 billion in SAFE loans from the EU to finance joint defense programs with other European partners. If those funds prove insufficient, the NEC could be activated from 2026 to 2028, government documents show.
Currently, Italy spends 1.54% of GDP on defense, projected to rise to 2% this year and 2.5% by 2028. Officials caution that rapid spending increases could cause market distortions and price hikes.
The NEC offers temporary fiscal leeway—up to 1.5% of GDP annually through 2028—to support defense investments while keeping within EU budget rules amid heightened security demands following Russia’s war in Ukraine.
