Europe Plots How to Finance Its Defense Spending Spree

Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

EU finance ministers are meeting in Warsaw today and tomorrow to figure out how to finance the bloc’s military build-up in the face of weakening US commitment to trans-Atlantic security and the threat from Russia. They will discuss a new pan-regional tool to finance joint procurement — which would come on top of the new €150 billion loan-based instrument currently in the pipeline — as well as tweaks to the EU fiscal rules to mobilize around €600 billion from national budgets. The aim is to add more permanent instruments to the EU’s toolbox. The long-term proposals are highly divisive, we are told, and many nations still prefer to implement what’s on the table before coming up with new plans. UK Chancellor of the Exchequer Rachel Reeves will also be at the Warsaw talks, and will tell EU counterparts that the “changed world” with President Donald Trump in the White House means the bloc should work more closely with the UK on defense spending.