Portugal Seeks Fiscal Escape to Boost Defence Spending

Portugal plans to activate a fiscal escape clause to allow increased defence spending, up to 1.5% of GDP, as encouraged by the European Commission. This move aligns with broader European goals to enhance military capabilities and cater to pressures from the U.S. for increased NATO funding.

Portugal has announced its intention to invoke a fiscal escape clause, allowing an increase in defence spending up to 1.5% of the nation's gross domestic product. This initiative is part of a coordinated effort alongside other European nations under pressure from U.S. President Donald Trump to enhance NATO contributions.

The European Commission has suggested allowing this fiscal leeway, permitting countries to escalate their defence budgets by 1.5% of GDP per annum for a four-year span. This strategy aims to amass nearly 800 billion euros to bolster Europe's defence infrastructure without facing usual deficit-related penalties.

The decision by Portugal's interim centre-right government follows discussions with the main opposition Socialist Party, ensuring collaborative consensus. This move represents a strategic alignment with Europe's vision to fortify military capabilities amid rising geopolitical tensions. ($1 = 0.8783 euros)

(With inputs from agencies.)