Primary Law
3 instrumentsReplaces old 3%/60% rigid rules with individual debt sustainability analysis per member state. Net expenditure path replaces structural balance target. Defence escape clause allows 4-year deficit exemption for defence investment. 14 states invoked escape clause (€680B signalled additional spending). Commission monitors via annual Country-Specific Recommendations.
€150B in EU-backed loans for member state defence investment. Fiscal impact: loans do not count against SGP deficit limits (Commission interpretation). UK/Norway supplier inclusion key dispute: Commission compromise at 65% EU production; EP at 50%; Council at 75%. If passed, largest EU joint borrowing since NextGenerationEU.
ECB deposit rate at 2.50% (Mar 2026), down from 4.0% peak. Gradual easing supporting fiscal expansion. TPI (Transmission Protection Instrument) backstop for sovereign spreads. Key tension: defence spending expansion requires low rates for fiscal sustainability. ECB-Commission coordination unprecedented.