ECB backs European common defense by “spending jointly through EU-level initiatives”

Brussels – The European Central Bank is relaunching the common European defense, and it is doing so by suggesting that the defense industry be supported through European rather than purely national initiatives. The Europe of defense can be done “by spending jointly through EU-level initiatives,” ECB Vice-President Luis de Guindos said in a hearing in the Economic Affairs Committee of the European Parliament. Working through EU initiatives, “we can achieve greater scale, reduce costs, and strengthen our strategic autonomy – all while supporting long-term growth and fiscal sustainability.”

De Guindos does not refer to the possibility of Eurobonds. He does not explicitly close to the hypothesis, which is up to national governments to decide. However, he certainly promotes the call for a preference for joint procurement and purchases, as envisaged in the European Commission’s White Paper on Defense. Therefore, De Guindos has a political message regarding reviving Europe’s defense and securing accounts: avoid individual national initiatives and prefer joint European choices: a common European defense.

The imperative for the Frankfurt institution remains financial and fiscal stability. “Financial stability is a global public good,” de Guindos insists. “It is in everybody’s interest and must remain the long-term goal.” So, yes to spending on defense, its industry, and all-new manufacturing, but keep an eye on the budget. Here comes the call for the European Commission and the simplification agenda in the name of competitiveness. “The ECB supports efforts to simplify the regulatory framework. However, this should not be confused with deregulation.”

It is not the first call for caution. The ECB has already warned not to get carried away and, on the contrary, to be careful how and how much to boost Europe’s defense. After warning about inflation, the ECB is now asking governments to keep an eye on national exchequers and the EU executive not to dismantle the rules framework, which is considered fundamental and functional for financial stability. “The resilience of our financial system can largely be attributed to the rules established since the global financial crisis,” de Guindos said.

In the background, no new crises are looming, but at the European Central Bank, it is wise not to take any risks. The outlook, after all, does not look the best. On the contrary, De Guindos acknowledges, “incoming data suggest modest growth in the first quarter of 2025.” The bad news may not end there for the Eurozone as “risks have intensified amid exceptional uncertainty, largely related to trade.” A reference to the Trump administration and its tariffs.