Recommendation for a COUNCIL RECOMMENDATION Allowing Bulgaria to deviate from the maximum growth rates of net expenditure as set by the Council under Regulation (EU) 2024/1263 (Activation of the national escape clause)
Date: 2025-06-04
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Bulgaria, European Semester, budget deficit, defence expenditure, gross domestic product, multilateral surveillance, public debt, public expenditure, stability pact, structural adjustment

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   EUROPEAN COMMISSION  Brussels, 4.6.2025  COM(2025) 601 final  Recommendation for a COUNCIL RECOMMENDATION Allowing Bulgaria to deviate from the maximum growth rates of net expenditure as set by the Council under Regulation (EU) 2024/1263 (Activation of the national escape clause)   
 
Recommendation for a 

COUNCIL RECOMMENDATION 

Allowing Bulgaria to deviate from the maximum growth rates of net expenditure as set 
by the Council under Regulation (EU) 2024/1263 
(Activation of the national escape clause) 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 121 thereof, 

Having regard to Regulation (EU) 2024/1263, and in particular Article 26 thereof, 

Having regard to the recommendation from the European Commission, 

Whereas: 

(1) 

(2) 

Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary 
surveillance1, together with the amended Regulation (EC) No 1467/97 on speeding up 
and  clarifying  the  implementation  of  the  excessive  deficit  procedure2,  and  the 
amended Council Directive 2011/85/EU on requirements for budgetary frameworks of 
the  Member  States3  are  the  core  elements  of  the  reformed  EU  economic  governance 
framework. The framework aims at ensuring public debt sustainability, and sustainable 
and inclusive growth through reforms and investments. It promotes national ownership 
and has a medium-term  focus, combined with an effective and coherent enforcement 
of the rules. 

The maximum growth rates of net expenditure as set in a Council recommendation in 
accordance  with  Articles  17(1)  or  19  of  Regulation  (EU)  2024/1263  are  the  single 
operational reference for the annual fiscal surveillance of each Member State and  are 
at the centre of the new economic governance framework. The maximum growth rates 
of  net  expenditure  as  set  by  that  Council  Recommendation  establishes  a  budgetary 
constraint for four or five years, which is based on an adjustment period of four years 
that can be, in the case of an extension, extended by an additional period of up to three 
years. 

(3) 

The framework provides for flexibility  in  the application of the rules in  the event  of 
exceptional  circumstances  outside  the  control  of  Member  States  that  have  a  major 

1 

2 

3 

Regulation 

(EC)  No 

Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  of  29  April  2024  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary  surveillance  and  repealing 
Council 
ELI: 
http://data.europa.eu/eli/reg/2024/1263/oj).  
Council Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation 
of 
ELI: 
procedure 
http://data.europa.eu/eli/reg/1997/1467/2024-04-30). 
Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the 
Member States (OJ L, 306, 23.11.2011, ELI: http://data.europa.eu/eli/dir/2011/85/2024-04-30). 

2024/1263, 

30.4.2024, 

excessive 

2.8.1997, 

1466/97 

deficit 

209, 

(OJ 

(OJ 

the 

L, 

L, 

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impact  on  the  public  finances,  in  accordance  with  Article  26  of  Regulation  (EU) 
2024/1263.  In  the  latter  case,  following  a request  from  a Member  State  and  on 
a recommendation by the Commission based on its analysis, the Council may within 
four  weeks  of  the  Commission  recommendation  adopt  a recommendation  allowing 
a Member State to deviate from its maximum growth rates of net expenditure as set by 
the  Council,  where  (i)  exceptional  circumstances  outside  the  control  of  the  Member 
State, (ii) have a major impact on the public finances of the Member State concerned, 
and (iii) provided that such deviation does not endanger fiscal sustainability over the 
medium term. The Council is to specify a time limit for such deviation. 

The  Heads  of  State  or  Government,  meeting  in  Versailles  on  10-11  March  2022, 
committed  to  bolster  European  defence  capabilities  in  light  of  Russia’s  military 
aggression against Ukraine. These aims were reiterated in  the Strategic Compass for 
Security and Defence. In its Conclusions on European defence of 6 March 2025, the 
European  Council  welcomed  the  intention  of  the  Commission  to  recommend  the 
activation, in  a coordinated manner, of the national escape clause under the Stability 
and Growth Pact as an immediate measure. 
In  its  Communication  of  19  March  20254,  the  Commission  has  invited  all  Member 
States  to  make  use  of  the  flexibility  provided  by  the  national  escape  clause  in  a 
coordinated  manner  with  a  view  to  maximising  the  impact  on  the  EU’s  defence 
capabilities.  This  flexibility  aims  at  facilitating  the  transition  to  higher  levels  of 
defence  spending  on  a  permanent  basis.  That  Communication  describes  that  the 
activation  of  the  national  escape  clause  would  allow  Member  States  to  deviate  from 
the  maximum  growth  rates  of  net  expenditure  as  set  by  the  Council  when  endorsing 
the  medium-term  fiscal-structural  plans  or  when  establishing  the  corrective  paths 
under the excessive deficit procedure, to the extent that this deviation is justified by an 
increase in defence spending relative to the reference year, and that the annual excess 
through 2028 will not exceed 1.5% of GDP.  Increases beyond that amount would be 
subject  to  the  normal  assessments  of  compliance.  Such  a  maximum  is  necessary  to 
ensure that fiscal sustainability is not endangered, while allowing all Member States to 
benefit  from  the  flexibility  as  they  move  towards  a  higher  level  of  defence 
expenditure.  The  exact  amounts  will  be  determined  when  outturn  data  become 
available, to ensure that the additional flexibility is used only for its intended purpose. 
The  Council  recommendation  of  [Date]5  endorsed  the  net  expenditure  path  of 
Bulgaria.  

On 2 May 2025, Bulgaria submitted a request to the Council and the Commission, to 
activate the national escape clause. 

In its request, Bulgaria sets out that, in a context of heightened geopolitical tensions, 
Russia’s  continued  war  of  aggression  against  Ukraine  and  its  threat  to  European 
security constitutes an existential challenge for the Union, which requires a significant 
increase of defence spending. This situation is an exceptional circumstance outside the 
control of each Member State.  

In its request, Bulgaria reports data on total defence expenditure (Table 1). In addition 
to  this,  Bulgaria  envisages  significant  expenditures  for  the  maintenance  and 
development of national defence capabilities and those related to collective defence for 

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

4 
5 

Commission Communication (C (2025) 2000 final) of 19 March 2025. 
Reference. 

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the years to come. Specifically, Bulgaria projects total defence expenditure to amount 
to 2.6% of GDP in 2025, 1.7% in 2026, 3.9% in 2027, and 2.3% in 2028. Therefore, 
the  increase  in  defence  expenditure  has  a  major  impact  on  the  public  finances  of 
Bulgaria. 

Table 1: Total defence spending in Bulgaria 

General government total 
defence expenditure  
(% of GDP) 

2021 a 

2022 a 

2023 a 

2024 b 

2025 b 

1.6 

1.6 

1.5 

1.4 

2.6 

Source: a: Eurostat; b: Information provided to the Council and the Commission by Bulgaria. 

(10)  Bulgaria  estimates  that  the  increase  in  total  defence  expenditure  as  a  ratio  to  GDP 
from  2024  to  2025  will  be  in  the  order  of  1.2  percentage  points  and  therefore 
contribute to deteriorating the government balance and increasing government debt.  

(11)  All else being equal, an increase in expenditure over the period covered by the national 
escape clause will lead to higher government  debt and a higher deficit by the end of 
that  period.  Indicative  projections  run  by  the  Commission  and  assuming,  by  2028,  a 
linear  uptake  of  the  full  increase  in  government  expenditure  allowed  by  this 
recommendation suggest that the deficit-to-GDP ratio and debt-to-GDP ratio in 2028 
would  be  1.4 pps.  and  3.0 pps.  higher,  respectively,  than  if  net  expenditure  grew  in 
line  with  the  Commission’s  prior  guidance6.  This  would  likely  require  an  additional 
fiscal adjustment after the period of activation of the national escape clause in order to 
meet the requirements of the fiscal framework, including to ensure that the debt ratio is 
put or remains on a plausibly downward path, or stays at prudent levels below 60% of 
GDP over the medium term and that the deficit stays or is brought below 3% of GDP 
and  maintained  below  the  reference  value  over  the  medium  term.  Bulgaria 
acknowledges that, going forward, structurally higher defence expenditure may require 
policies to preserve fiscal sustainability and compliance with the fiscal rules over the 
medium term. 

(12)  General  government  defence  expenditure  data  are  compiled  and  released  by  the 
national  statistical  authorities  and  Eurostat,  according 
International 
Classification  of  the  Functions  of  Government  (COFOG)7  in  the  framework  of  the 
European  System  of  National  Accounts  (ESA2010)8.  These  data  are  appropriate  to 
assess  the  impact  of  defence  spending  on  government  deficit,  debt  and  net 
expenditure,  and  related  concepts.  Eurostat  in  close  cooperation  with  the  national 
statistical authorities, will establish a data collection process. The starting point should 
be  COFOG  defence  categories,  while  also  considering  the  NATO  definition  and 
retaining the possibility to address anomalies that might be attributable to differences 

the 

to 

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at: 

https://economy-finance.ec.europa.eu/economic-and-fiscal-governance/stability-and-

Available 
growth-pact/preventive-arm/national-medium-term-fiscal-structural-plans_en#bulgaria  
Manual  on  sources  and  methods  for  the  compilation  of  COFOG  statistics  —  Classification  of  the 
Functions of Government (COFOG) — 2019 edition. 
Regulation (EU) No 549/2013 of the European Parliament and of the Council (OJ L 174, 26.6.2013, p. 
1). 

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in  the  respective  annual  reporting  systems.  The  data  collection  process  needs  to  be 
aligned with EDP reporting deadlines. 

(13)  Moreover, for some of the contracts for military equipment signed during the period of 
activation of the national escape clause, delivery may occur at a later stage, therefore 
impacting public finances only after the period of activation of the clause. To cater for 
this  eventuality,  the  flexibility  granted  under  the  national  escape  clause  should  also 
apply  to  defence  expenditure  linked  to  such  later  delivery,  provided  that  the 
corresponding contracts were signed during the period of activation of the clause and 
that this delayed defence spending remains within the overall cap mentioned above. 

(14)  The expenditure financed by loans provided by the new instrument for Security Action 
for  Europe  (SAFE)9  for  the  reinforcement  of  European  defence  industry,  would 
automatically  benefit  from  the  above  flexibility.  To  this  end,  Member  States  would 
report  to  Eurostat  all  defence-related  expenditures  made  under  the  SAFE  Instrument 
under the categories “defence products” and “other products for defence purpose” as 
defined in the proposal for a Regulation establishing the SAFE Instrument. 

(15)  This recommendation does not modify the definitions of government deficit, debt and 
net expenditure, and related concepts. Data based on these concepts are to be compiled 
and  reported  by  Bulgaria  in  accordance  with  Regulations  (EU)  2024/1263,  No 
479/2009 and No 549/2013. 

HEREBY RECOMMENDS: 

      1.  During  the  period  2025-2028,  Bulgaria  is  allowed  to  deviate  from  and  exceed  the 
maximum  growth  rates  of  net  expenditure  as  set  by  Council  Recommendation 
C/2025/…10 to the extent that the net expenditure in excess of these maximum growth 
rates is not more than: 

i. 

ii. 

the increase in defence expenditure in percent of GDP since 2024;  

provided that the deviation in excess of the maximum growth rates of net  
expenditure does not exceed 1.5 percent of GDP. 

2.   In  the  years  after  2028,  Bulgaria  may  still  deviate  from  and  exceed  the  maximum 
growth  rates  of  net  expenditure  as  set  by  a  Council  Recommendation  in  accordance 
with  Articles  17  or  19  of  Regulation  (EU)  2024/1263,  to  the  extent  that  the  net 
expenditure  in  excess  of  these  maximum  growth  rates  is  related  to  deliveries  of 
military  equipment  contracted  before  end-2028  and  remains  within  the  overall  cap 
mentioned above.  

3.  In accordance with Article 22(7) of Regulation  (EU) 2024/1263, the deviations from 
the maximum growth rates of net expenditure as set by the Council that are allowed by 
this Recommendation will not be recorded as debits in the control account of Bulgaria. 

4.   In  order  to  ensure  correct  recording  of  the  additional  expenditure  Bulgaria  is  to 
include  actual  and  planned  data  on  total  defence  expenditure  (COFOG  division  02) 

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Council  Regulation  (EU)  2025/…  establishing  the  Security  Action  for  Europe  (SAFE)  through  the 
Reinforcement of the European Defence Industry Instrument. 
Reference. 

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and defence investment (COFOG division 02 P.51) and any expenditure to be financed 
by SAFE loans that are not covered in COFOG-02: 

(a) for years T-4, T-3, T-2 and T-1 (with year T being the current year) in the reporting 
to  the  Commission  (Eurostat)  in  accordance  with  Council  Regulation  (EU)  No 
479/2009;  

(b)  for  years  2021  through  year  T  (current  year),  in  national  medium-term  fiscal 
structural plans and in annual progress  reports in accordance with Articles 11(1) 
and 15, and 21(1) of Regulation (EU) 2024/1263; 

This recommendation is addressed to Bulgaria. 

Done at Brussels, 

For the Council 
The President 

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