EU proposes $158 billion defense loan as Trump pulls back.
The European Union will propose extending €150 billion ($158 billion) in loans to boost defense spending as the bloc tries to adjust to US President Donald Trump’s abrupt pullback of American security on the continent.
After decades of underinvestment, European Commission President Ursula von der Leyen said that the EU also plans to activate a mechanism that would allow countries to use their national budgets to spend an additional €650 billion on defense over four years without triggering budgetary penalties.
Combined with the new defense spending loans, von der Leyen said the package could mobilize nearly €800 billion — if governments take full advantage of the new leeway.
The euro rose as much as 0.3% to $1.0521, its highest level since Feb. 26, after von der Leyen’s announcements. European bonds trimmed earlier gains, with the yield on 10-year German debt trading around 2.46% compared to about 2.43% before the news.
The new loan instrument would be similar to one set up during the Covid pandemic to support member states’ short-time work schemes and similar measures.
Source: FINANCE.YAHOO