MNI BRIEF: EU Defence Boost To Have Substantial Outlook Impact
MNI (LONDON) - Increased defence spending and investment will have "a significant and substantial effect on the economic outlook" of the EU, a senior European official said today, but added that this is so far hard to quantify.
Turning to the bond markets' reaction to Germany and the EU's defence spending announcements this week, the official said that it was probably not due to financial stability concerns, but could be better explained by the fact "this looks like it is going to be a sizeable fiscal impulse. It will increase growth and demand and will affect the policy mix..."
The comments come ahead of a meeting of the bloc's finance ministers on Monday and Tuesday where the impact of this week's EU defence announcements on fiscal policy will be a major topic in the discussions. Meanwhile policy uncertainties around trade and more broadly as a result of drastic policy change in the US are already hitting the euro area's domestic demand, the official said. (see MNI ECB WATCH: Cuts 25BP, Direction No Longer Clear )