Economy Update – Follow-up
The President of the European Commission, Ursula von der Leyen, announced on Tuesday that the European Union is initiating plans to enhance its defense spending, potentially mobilizing up to €800 billion (approximately $841 billion).
“Europe is poised to significantly increase its defense expenditures, driven by the urgent need to support Ukraine in the short term as well as the long-term necessity to take greater responsibility for our collective security,” she stated.
Von der Leyen conveyed her message to European leaders ahead of the upcoming European Council meeting later this week, where she will present the “Rearmament Plan for Europe.” This initiative is designed to empower EU member states to boost their investments in defense capabilities.
“The Rearmament Plan for Europe could unlock nearly €800 billion, paving the way for a more secure and resilient continent. This is a pivotal moment for Europe, and we are prepared to rise to the challenges ahead,” she emphasized.
The plan entails a new joint borrowing strategy amounting to €150 billion from the EU, intended for member states to invest in what Von der Leyen described as “shared European defense capabilities.”
Highlighted areas of investment include air defense systems, missile and artillery platforms, munitions production, advanced aircraft, and anti-drones technology. The initiative will also address critical needs such as cybersecurity and military mobility.
This would mark the EU’s second instance of collective borrowing, the first being enacted in 2020 in response to the economic upheaval caused by the COVID-19 pandemic.
The leaders of the 27 EU member states will convene in Brussels on Thursday to deliberate on defense strategies and support mechanisms, including the proposals surrounding the “Rearmament of Europe.”
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