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(MNI) London

European Union leaders are set to endorse calls for a big boost to defence spending at their March 10-11 summit in Versailles, but look likely to back away from a French proposal to finance it with joint bond sales along the lines of the bloc’s response to the Covid pandemic, EU officials told MNI,

“States are ready to increase defence spending, that’s probably the one thing where there is wide agreement, but how to make defence spending an EU issue and how do you involve EU budgets in that? That's not a simple question,” one official said.

While debate on EU defence collaboration and how to finance it will continue after the summit, officials said there was limited support for the proposal by French President Emmanuel Macron, reported by MNI, to pay for a bond issuance programme similar to that of the EUR800 billion NextGenerationEU plan to restore economies to health after the pandemic. Macron also wanted to use the proposed new fund to help break the EU’s energy dependence on Russia, in a plan which would further his long-expressed ambitions for Europe to develop strategic autonomy. (See MNI SOURCES: Macron To Push For EU Defence, Energy Fund)

ONLY SOME SUPPORT

“Our feeling is that this is not for today, since you have currently the NGEU, which is covering the main points which are being identified – so when you talk energy, that is already part of the NGEU and national recovery plans. When you talk strategic dependency, that’s also covered and this money is just starting to flow in member states,” another official said.

MNI understands that a bond-issuance initiative is favoured by some EU finance ministries and that a proposal was indeed being prepared by the European Commission, although officials said they had not been surprised by the lack of support from other EU states.

MNI London Bureau | +44 203-865-3829 | jason.webb@marketnews.com
MNI London Bureau | +44 203-865-3829 | jason.webb@marketnews.com

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