VALLETTA (MALTA) (ITALPRESS/MNA) – Europe risks undermining its own stability if it slashes welfare spending to fund higher defence budgets, Maltese Finance Minister Clyde Caruana cautioned while speaking at the 20th anniversary of the European think tank Bruegel.
Caruana said the EU faces “twin threats” of external aggression and internal unrest, warning that growing inequality and social divisions threaten to erode trust in the Union.
He acknowledged that rising defence spending is “necessary” amid geopolitical tensions but argued it must not come “at the cost of dismantling our social safety nets.” Otherwise, he said, Europe could “win battles abroad only to lose the peace at home.”
Caruana’s remarks come as the EU debates its next budget, with member states split over balancing military commitments with long-standing social and economic priorities. Germany recently opposed a European Commission plan to boost the EU budget, while France’s government collapsed over proposed austerity measures.
The minister urged European lawmakers to rethink fiscal rules to meet modern challenges such as climate transition, digital innovation and defence, stressing that “rules designed for yesterday’s problems cannot blindly be applied to today’s realities.”
On Malta, Caruana said fiscal consolidation after the Ukraine war has been gradual, proving that responsibility “does not mean austerity” but can support both economic growth and social progress.
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