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EUROPEAN COMMISSION

Brussels, 30.10.2026 COM(2026) 604 final

Recommendation for a

COUNCIL RECOMMENDATION

Allowing Portugal to deviate from the maximum growth rates of net expenditure as set

by the Council under Regulation (EU) 2024/1263

(Activation of the national escape clause)

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Recommendation for a

COUNCIL RECOMMENDATION

Allowing Portugal to deviate from the maximum growth rates of net expenditure as set

by the Council under Regulation (EU) 2024/1263

(Activation of the national escape clause)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular

Article 121 thereof,

Having regard to Regulation (EU) 2024/1263 of the European Parliament and of the Council

on the effective coordination of economic policies and on multilateral budgetary surveillance

and repealing Council Regulation (EC) No 1466/97, and in particular Article 26 thereof,

Having regard to the recommendation from the European Commission,

Whereas:

(1) Regulation (EU) 2024/1263, together with the amended Regulation (EC) No 1467/971,

and the amended Council Directive 2011/85/EU2 are the core elements of the EU

economic governance framework. The framework aims at promoting sound and

sustainable public finances and sustainable and inclusive growth and resilience

through reforms and investments, and preventing excessive government deficits. It

promotes national ownership and has a medium-term focus, combined with an

effective and coherent enforcement of the rules.

(2) The maximum growth rates of net expenditure as set in a Council recommendation in

accordance with Articles 17(1), 19 or 20 of Regulation (EU) 2024/1263 are the single

operational reference for the annual fiscal surveillance of each Member State and are

at the centre of the economic governance framework. The maximum growth rates of

net expenditure as set by that Council Recommendation establish a budgetary

constraint for four or five years, which is based on an adjustment period of four years

that can be extended by an additional period of up to three years.

(3) The framework provides for flexibility in the application of the rules in the event of

exceptional circumstances outside the control of Member States that have a major

impact on the public finances, in accordance with Article 26 of Regulation (EU)

2024/1263 (“national escape clauses”). In the latter case, following a request from

a Member State and on a recommendation by the Commission based on its analysis,

the Council may within four weeks of the Commission recommendation adopt

a recommendation allowing a Member State to deviate from its maximum growth rates

1 Council Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation

of the excessive deficit procedure (OJ L 209, 2.8.1997, p. 6, ELI:

http://data.europa.eu/eli/reg/1997/1467/oj). 2 Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the

Member States (OJ L 306, 23.11.2011, p. 41, ELI: http://data.europa.eu/eli/dir/2011/85/2024-04-30).

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of net expenditure as set by the Council, where (i) exceptional circumstances outside

the control of the Member State (ii) have a major impact on the public finances of the

Member State concerned, and (iii) provided that such deviation does not endanger

fiscal sustainability over the medium term. The Council is to specify a time limit for

such deviation.

(4) Russia’s war of aggression against Ukraine and its repercussions constitute an

existential challenge for the European Union. The Commission has invited Member

States to request the activation of the national escape clause of the Stability and

Growth Pact in a coordinated manner to support the EU efforts to achieve a rapid and

significant increase in defence spending3 and this proposal was welcomed by the

European Council of 6 March 2025.

(5) Following the request of Portugal, on 8 July 2025 the Council, upon a

recommendation from the Commission, adopted a Recommendation allowing Portugal

to deviate from the recommended maximum growth rates of net expenditure for

increases in defence expenditure4. This flexibility aims at facilitating the transition to

higher levels of defence spending provided that it does not endanger fiscal

sustainability over the medium term.

(6) In its Communication of 3 June 2026, the Commission announced that the scope of the

national escape clause could be extended to accommodate the measures decided by the

Member States after 28 February 2026 which strengthen the structural resilience of the

European energy system and accelerate the transition away from fossil fuels

(henceforth, “energy security measures”)5. On 18 August 2026, the Commission

published a Notice with further guidance to Member States on the scope and design of

the additional flexibility for energy security measures6. The measures should be

nationally financed, with a direct budgetary impact, decided after 28 February 2026,

targeted and cost-effective and designed to maximise impact in terms of their

contribution to decarbonisation and/or energy savings and strengthen Europe’s energy

security. In order to ensure that fiscal sustainability is not endangered, and to contain

the necessary increase in fiscal adjustment in subsequent periods, the existing cap of

1.5% of GDP remains unchanged and applies to both the defence- and energy-related

flexibility. Furthermore, the flexibility granted for energy security measures should not

exceed 0.3% of GDP per year, while the cumulative flexibility by end-2028 should not

exceed 0.6% of GDP.

(7) On 9 October 2026, Portugal submitted a request, to the Council and the Commission,

to extend the application of the national escape clause to include additional measures

enhancing energy security. In its request, Portugal underlines the repercussions of

military action in the Persian Gulf, which endangers Europe’s long-term energy

security. This situation is an exceptional circumstance outside the control of the

3 Communication from the Commission, 'Accommodating increased defence expenditure within the

Stability and Growth Pact’, Brussels, 19.3.2025, C(2025) 2000 final. 4 Council Recommendation of 8 July 2025 allowing Portugal to deviate from the maximum growth rate

of net expenditure as set by the Council under Regulation (EU) 2024/1263 (Activation of the national

escape clause), (OJ C, C/2025/3972, 20.8.2025, ELI: http://data.europa.eu/eli/C/2025/3972/oj). 5 Communication from the Commission on the 2026 European Semester – Spring Package

(COM(2026)200 final). 6 Commission Notice – Guidance to Member States on Broadening the Scope of the National Escape

Clause for Energy Security, (OJ C, C/2026/4514, 18.8.2026, ELI:

http://data.europa.eu/eli/C/2026/4514/oj).

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Member State and requires a significant increase in government spending to reduce the

dependence on, and the vulnerabilities related to, imported fossil fuels and thereby

such an increase in government spending contributes to energy security.

(8) In its request, Portugal presents an initial list of planned energy security measures that,

based on a preliminary assessment, could fall within the scope of the flexibility for

energy security. This initial assessment does not prejudge future assessments of

eligibility to be carried out by the Commission. These measures envisage, for

example, investments to improve the railway system, an investment in a digital

permitting platform to accelerate the deployment of renewable energy projects, and

subsidies for households’ investment in energy efficiency technologies.

(9) An assessment of the eligibility in terms of scope, additionality, targeting and cost

effectiveness of concrete measures, and of their budgetary impact, will be carried out

by the Commission as part of its regular fiscal surveillance. This is to determine the

flexibility stemming from energy security measures that should be considered when

setting out the control account for Portugal and assessing compliance with the

recommended maximum growth rates of net expenditure.

(10) To this end, Portugal should twice a year report to the Commission the list of concrete

energy security measures that it considers eligible for flexibility under the national

escape clause and provide evidence regarding their eligibility and budgetary impact.

This regular reporting on energy security measures will form part of the bi-annual

fiscal surveillance process. The spring reporting should include measures and their

budgetary cost for the previous year and their forecast for the current year, while the

autumn reporting will include measures for the current year, as well as measures for

the following year, which have been adopted or credibly announced in sufficient

detail. This will enable the Commission to take into consideration in its fiscal

surveillance the concrete measures to enhance energy security, within the maximum

annual and cumulative caps of 0.3 and 0.6 percent of GDP, respectively.

(11) This recommendation supersedes Recommendation C/2025/39727.

(12) This recommendation does not modify the definitions of government deficit, debt and

net expenditure, and related concepts. Data based on these concepts are to be compiled

and reported by Portugal in accordance with Regulation (EU) 2024/1263, Council

Regulation (EC) No 479/20098 and Regulation (EU) No 549/20139.

HEREBY RECOMMENDS:

(1) Until 2028, Portugal is allowed to deviate from and exceed the maximum growth

rates of net expenditure as set by Council Recommendation C/2025/64110 to the

7 Council Recommendation of 8 July 2025 allowing Portugal to deviate from the maximum growth rate

of net expenditure as set by the Council under Regulation (EU) 2024/1263 (Activation of the national

escape clause), (OJ C, C/2025/3972, 20.8.2025, ELI: http://data.europa.eu/eli/C/2025/3972/oj). 8 Council Regulation (EC) No 479/2009 of 25 May 2009 on the application of the Protocol on the

excessive deficit procedure annexed to the Treaty establishing the European Community (OJ L 145,

10.6.2009, p. 1-9, ELI: http://data.europa.eu/eli/reg/2009/479/2014-09-01). 9 Regulation (EU) No 549/2013 of the European Parliament and of the Council of 21 May 2013 on the

European system of national and regional accounts in the European Union (OJ L 174, 26.6.2013, p. 1,

ELI: http://data.europa.eu/eli/reg/2013/549/2025-09-01). 10 Council Recommendation of 21 January 2025 endorsing the national medium-term fiscal-structural plan

of Portugal (OJ C, C/2025/641, 10.2.2025, ELI: http://data.europa.eu/eli/C/2025/641/oj).

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extent that the net expenditure in excess of those maximum growth rates is not more

than

(2) the sum of:

(a) the increase in defence expenditure in percent of GDP since 2021

(reference year);

(b) the budgetary cost of eligible measures which enhance energy security

during the period 2026-2028, capped at 0.3 percent of GDP per year and

0.6 percent of GDP in cumulative terms over the same period;

(3) provided that the total deviation in excess of the maximum growth rates of net

expenditure does not exceed 1.5 percent of GDP.

(4) In the years after 2028, Portugal may still deviate from and exceed the maximum

growth rates of net expenditure as set by a Council Recommendation in accordance

with Articles 17, 19 or 20 of Regulation (EU) 2024/1263, to the extent that the net

expenditure in excess of these maximum growth rates is related to deliveries of

military equipment contracted before end-2028 and remains within the overall cap

mentioned above.

(5) In accordance with Article 22(7) of Regulation (EU) 2024/1263, the deviations from

the maximum growth rates of net expenditure as set by the Council that are allowed

by this Recommendation will not be recorded as debits in the control account of

Portugal.

(6) In order to ensure correct recording of the additional expenditure, Portugal is to

include actual and planned data on total defence expenditure (COFOG division 02),

including on defence investment (COFOG division 02 P.51) and any expenditure to

be financed by SAFE loans that are not covered in COFOG-02:

(a) for years 2021 through year T-1 (with year T being the current year) in the

reporting to the Commission (Eurostat) in accordance with Council Regulation

(EU) No 479/2009;

(b) for years 2021 through year T (current year), in national medium-term fiscal

structural plans and in annual progress reports in accordance with Articles 11(1)

and 15, and 21(1) of Regulation (EU) 2024/1263;

(c) for years T (current year) and T+1 in draft budgetary plans in accordance with

Regulation (EU) No 473/2013 of the European Parliament and of the Council11.

(7) In order to ensure correct recording, Portugal is to report to the Commission concrete

measures enhancing energy security for the purpose of this recommendation in 2026-

2028. The reporting to the Commission of these concrete measures should respect the

11 Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013 on

common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of

excessive deficit of the Member States in the euro area (OJ L 140, 27.5.2013, pp. 11–23).

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reporting template provided by the Commission, including information on the state

of implementation, evidence regarding their eligibility, and estimated budgetary

impacts quantified in a transparent and prudent manner. The reporting is to take

place twice a year, in spring by 15 April, and in autumn, in the context of draft

budgetary plans, by 15 October.

This recommendation is addressed to the Portuguese Republic.

Done at Brussels,

For the Council

The President