EU's Defense Spending Plan Will Not Affect AAA Credit Rating - Fitch

According to Fitch Ratings, the European Union's (EU) plan to increase defense spending will not lead to a downgrade in its AAA credit rating despite additional debt. The agency stated on Thursday that rising national defense expenditures could impact the ratings of member countries with AAA status in the medium term.

The initiative, known as ReArm Europe, responds to concerns that Europe can no longer rely on U.S. protection amid the ongoing conflict in Ukraine. Fitch noted that this effort reaffirms the political importance of the EU, which is a key factor in its credit assessments. Earlier this month, the European Commission proposed borrowing up to €150 billion ($157.76 billion) to lend to EU governments under this rearmament plan. Fitch emphasized that while increased defense spending may raise the EU's debt, it will not alone trigger a downgrade in the valuable AAA credit rating.