Europe should finance increased defense spending by issuing a joint bond, Italian Foreign Minister Antonio Tajani said today, signaling again that the financial burden would be too great for the Italian state budget.

"We need to issue European bonds to finance defense spending," Tajani said at a press conference in Rome.

At the end of January, the minister declared that Italy could not allocate five percent of gross domestic product to defense, responding to demands from US President Donald Trump that European member states increase spending.

"We need to invest more, but we cannot reach five percent of gross domestic product. We are making great efforts to reach two percent," Tajani added.

Debt is a particularly sensitive issue for Italy, whose public debt significantly exceeded the value of gross domestic product in the third quarter of 2024, according to Eurostat data.

European defense spending, measured as a share of gross domestic product, will reach 1.9 percent this year, compared with America's 3.3 percent, S&P recently estimated.

Last year, 23 of the 32 members met the two percent target set by NATO, and that was after digging deeper into their pockets.

If defense spending were to increase to five percent of gross domestic product, this would mean additional spending of up to $875 billion per year for the EU, the agency calculated.

Such an increase would require governments to make savings in other budget lines, they pointed out, warning that the alternative of additional borrowing would likely mean downgrades in credit ratings.

If European countries were to match the 3.3 percent of US gross domestic product, it would mean an additional cost of almost $600 billion per year for the EU, according to Eurostat GDP data for 2023.

Increasing spending to the current NATO average of 2.67 percent of gross domestic product would mean an additional cost of $242 billion per year for the EU as a whole.

The political consequences of reducing social spending to increase defense spending are likely to be significant. One possible solution is the issuance of joint debt, and the issuers could be the European Stability Mechanism, the European Investment Bank, and the EU.