Hungary is one of a dozen EU members to have formally requested the activation of the national escape clause under the bloc's Stability and Growth Pact, according to a statement by the European Commission. The clause, part of the broader ReArm Europe Plan and Readiness 2030 initiative, would allow countries to temporarily deviate from their agreed fiscal paths in order to boost defence spending.

Final approval will rest with national leaders at the European Council meeting at the end of May, where the Commission is expected to table recommendations as part of the 2025 Spring European Semester package.

President Ursula von der Leyen proposed in March that member states make use of the initiative, allowing them to increase military spending without breaching EU fiscal rules.

The clause would give member states up to 1.5% of GDP in additional annual fiscal space for defence investments until 2028, without triggering sanctions under the EU’s fiscal framework. According to earlier reporting by Portfolio, the Hungarian government intends to make full use of the flexibility, potentially adding billions to its defence budget.

The Commission emphasised that the clause is only to be used under exceptional circumstances, in this case, the security fallout from Russia’s war in Ukraine.

"The EU is taking a decisive step to strengthen defence spending and readiness. This clause offers countries the flexibility they need to scale up investment in defence capabilities and industry, while maintaining overall fiscal discipline," commented Valdis Dombrovskis, executive VP for an Economy that Works for People. 

The temporary derogation, designed as part of the EU’s ReArm Europe Plan, aims to unlock as much as €650bn in additional defence investment across the bloc over four years. For Hungary, the clause would offer a rare chance to channel substantial funds into military modernisation while staying within EU fiscal limits, financial website Portfolio.hu adds.