Increased EU defense spending may weaken financial situation of region's countries — Scope

According to statements by rating agency Scope on Friday, increased defense spending could weaken the creditworthiness of European governments. This may occur if they fail to reduce expenditures in other sectors and boost budget revenues.

On Wednesday, NATO countries reached an agreement to increase total defense spending to 5% of production volume over the next decade. This decision stems from the alliance's aim to strengthen "national security" and military resilience.

According to a Scope report published on Monday, higher defense spending will lead to increased borrowing and a worsening debt-to-GDP ratio in most EU countries. The additional financial burden will particularly affect countries such as France, Belgium, and Italy, which are already facing disciplinary measures from the European Union due to high budget deficits.

The EU government plans to establish a fund of up to 150 billion euro ($175.87 billion) for defense needs, financed through joint borrowing. However, agency experts believe achieving current objectives may require more substantial investments.