Otto Brøns-Petersen // 14 January 2026

It's a topsy-turvy world.

The Danish Social Democrat-Liberal-Moderate coalition government was formed on the grounds that defence must be strengthened and that the bill must be financed through reforms. Technically speaking, Denmark's finances are sustainable. Therefore, it would actually be possible to finance this with some of the tax revenue that is being overcharged in the long term.

In contrast, virtually all other EU countries have unsustainable public finances and, in many cases, debt problems that are not under control. However, the EU is proposing to finance the increased defence expenditure through debt.

Fundamentally, there is no good reason to finance defence through debt. Debt means shifting the burden to others, primarily future generations. Why should they be burdened by the need to gradually increase defence spending to counteract a growing threat today?

The short message from the incumbent governments is that they insist on maintaining a peace dividend that no longer exists, and that future generations must pay for it instead.

But can Denmark not remain indifferent, as long as the other European NATO countries are rearming?

Unfortunately not. The debt problems pose serious risks for the EU as a whole. The eurozone countries in particular have already broken the treaty rules stipulating that no country can be held liable for another country's debt. Otherwise, countries such as France and Italy would be in serious trouble. But non-eurozone countries are also increasingly being affected by the problems of the debt-ridden countries.

The Treaty's rules on maximum debt and deficits are necessary to avoid centralisation of economic policy, but have not been effectively enforced for a quarter of a century, during which debt problems have been growing structurally.

Instead, the rules have been suspended with increasing frequency, most recently this year, when the floodgates were opened to finance defence spending.

Germany, which has otherwise been intended to play the role of a fiscally conservative force in the EU, has watered down its constitutional debt brake and is set to significantly exceed the EU's debt ceiling.

On top of national debt problems, the EU has taken on joint debt during the pandemic. This was presented as an extraordinary measure, but already the Commission, among others, is pushing for more joint debt.

The debt crisis is weakening the EU economically and politically. A lack of stability and healthy, reform-based economic growth is in itself a threat to defence capabilities in the slightly longer term. Sending a message to Putin that the EU will only rearm if others pay is not a strong position.

If the Danish government is serious about its desire for a stronger Europe, it should use its presidency to tighten fiscal discipline and prevent more shared debt.

Otto Brøns-Petersen is the Director of Analysis at Center for Political Studies (CEPOS).

This blog is a translation. Click here to read the original in Danish.