An EU exemption allows 16 member countries, including Germany, to raise their defence spending by 1.5% of GDP without having to adhere to the bloc’s strict budget deficit and debt limits that would otherwise put them at risk of deficit proceedings. Yesterday, the European Commission (EC) greenlit Germany’s budget proposal covering the years 2025-2031, even though it entails new debt to finance heavy investments in defence, infrastructure and climate protection. Accordingly, the EC indicated that temporary breaches of EU rules were unlikely to trigger an excessive deficit procedure against Berlin. This exemption allows EU members to spend an additional 1.5% of gross domestic product (GDP) on defence over four years without risking deficit proceedings. While EU countries are usually required to submit five-year plans, in certain conditions, they may submit longer-term proposals that give them more leeway in meeting the bloc’s deficit and debt ceilings.