The State Budget proposal for 2026 (OE 2026) sent to Parliament in October – the original version, from the Ministry of Finance, still without the changes that have occurred in the meantime and which may occur until the final vote next Thursday – is “in compliance” with European rules and receives a lot of praise from the European Commission (EC).
According to the new edition of the biannual evaluation cycle of the budgetary policies of European Union countries (European Semester, autumn edition), released this Tuesday, the Commission gave its opinion “on the proposals for budgetary plans for 2026 of 17 euro area Member States”.
Twelve of these Budget proposals “were considered compliant and, therefore, Member States were invited to continue implementing budgetary policies in 2026 as planned” in the document, says the supervision of the European Commissioner for Economy, Valdis Dombrovskis.
The countries that scored well in this assessment were: “Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Luxembourg, Portugal and Slovakia”.
As part of this biannual package, the Commission assessed “all Member States’ compliance with the EU fiscal framework and provided guidance to ensure that their fiscal policies in 2026 are aligned with the relevant recommendations of the European Council”.
Brussels further explains that its assessment “focuses on the growth of net expenditure, the only operational indicator in the economic governance framework”.
Turning a blind eye to military expenses
And it also reveals that, in the case of Portugal and other countries, the new EC assessments already take into account the discount that will be made to military expenses, which therefore no longer count, temporarily (for now, until 2028), for the public accounts that will be subject to European assessment.
“For the 16 Member States for which the Council activated the national safeguard clause, the assessment takes into account flexibility for increases in defense spending”, explains the EC.
“To date, 16 Member States have requested the activation of the national escape clause. They are: Belgium, Bulgaria, Czechia, Denmark, Germany, Estonia, Greece, Croatia, Latvia, Lithuania, Hungary, Poland, Portugal, Slovenia, Slovakia and Finland.”
According to the EC, this is “a critical number of countries, demonstrating the benefit of following a coordinated approach”.
The aforementioned national escape or safeguard clause “provides Member States with flexibility, under EU budgetary rules, to increase defense spending, without an immediate need to finance this increase with spending cuts or revenue-raising measures“, recalls the Commission.
“Member States for which the Council has activated the national escape clause for defense expenditure may temporarily deviate from its recommended maximum growth rates for net expenditure, provided that these deviations are related to increases in defense expenditure of up to 1.5% of Gross Domestic Product (GDP) in the period 2025 to 2028″, explains the European Semester document.