Why Poland is still pushing for more EU-wide defence funding ideas

Good morning. Ukraine has agreed to a 30-day “complete ceasefire” if Russia commits to the same, after negotiations between US and Ukrainian officials in Jeddah yesterday. The talks also saw Washington promise to “immediately” restart suspended shipments of military assistance to Kyiv and intelligence sharing.

Meanwhile, the European Commission this morning struck back against Donald Trump’s 25 per cent tariffs on steel and aluminium imports taking effect.

Today, Poland’s finance minister tells our economy correspondent that Europe still needs “more” new initiatives to increase the continent’s defence spending, and our competition correspondent reveals a new push from the bloc’s biggest beasts to bolster its chip industry.

European ‘awakening’

The mood in Europe has shifted towards spending more funds on defence, as demonstrated by the pace and size of recent announcements about increasing military expenditure — but that’s not enough for Poland.

“I believe there is something like a European awakening. In recent days some countries changed their positions visibly. I mean, in some cases it was a drastic change,” Andrzej Domański, Poland’s finance minister, told Paola Tamma. But, he added: “There is a need for more.”

Context: Poland holds the rotating presidency of the EU and has made security — and the necessary funding — the number one priority of the EU. Warsaw plans to raise defence spending to 4.7 per cent of its output this year, up from 4.1 per cent in 2024 — but wants more funding to happen at EU level.

The risk is that if defence funding remains predominantly national, countries like Italy, Spain and France that have high debt and limited fiscal space could find the market appetite restricts their ability to spend more.

“We do need to avoid stigmatisation of countries, there are countries who have quite a high level of debt, and we need to provide a solution that would be acceptable and that would work for them,” Domański said.

The European Commission last week proposed an initiative to raise €150bn in new loans for member states to spend on weapons, and a relaxation of EU fiscal rules for national defence expenditure.

While those are welcome, for Poland “there must be further steps,” Domański said, adding: “First of all, we focus on an EU-wide solution . . . but then of course, we would do whatever it takes to bring security back to Europe.”

Polish premier Donald Tusk has promoted the idea of a separate rearmament bank which would be open to non-EU countries and raise hundreds of billions from budgetary guarantees of participating countries.

“If there will be no support for it within all 27 member states, then also the intergovernmental solutions are possible,” Domański said.

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Cashing in the chips

Europe aims to become a bigger player in the chips that drive the global economy, nine European countries, including powerhouses Germany and France, will announce today in a joint statement seen by Barbara Moens.

Context: The global chips race is finding new momentum as Europe is increasingly worried about its vulnerability to American digital infrastructure and services under US President Donald Trump. The European Commission is set to evaluate its Chips Act, potentially leading to an even bigger push for increasing semiconductor manufacturing. 

“Ensuring a resilient and competitive European semiconductor sector is not just an economic priority but a strategic necessity for prosperity and safety,” states the draft document that the countries are set to adopt on the sidelines of a meeting of EU competition ministers today.

The initiative is led by the Netherlands, the home of chip manufacturing equipment giant ASML. For Dirk Beljaarts, Dutch minister of economic affairs, it is key that the nine countries have agreed to a joint approach for the semiconductor industry.

In order to strengthen Europe’s position in the semiconductor industry, “the EU must strongly enhance its co-operation,” Beljaarts said.

The countries want to increase the production capacity within the bloc and make sure that “new, reliable and innovative technologies are developed and industrialised in the EU,” they will state.

In the wake of the Chips Act, the countries also want to discuss “support possibilities within Europe for the long term”.

What to watch today

1. EU council president António Costa meets German Chancellor Olaf Scholz in Berlin.

2. G7 foreign ministers meet in Quebec.

3. EU competitiveness ministers meet in Brussels.

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