Welcome to the Euro Intelligence Podcast. I'm Wolfgang Munchau and with me, I'm Zasana Munchank and Jack Smith.

Today we would like to talk about the debt break, European defense and Donald Trump.

And we've had some astonishingly important news in the last week and people thought, you know,

every day something news is happening. We've had the famous bust-up in the White House, summits, declarations that the EU needs to

take care after its own, then the essential suspension of defense spending from the

Stability Pact.

Then was a LaFonda Alliance announcement of a European Defense Fund.

And then last night, on Tuesday night, we had the astonishing announcement of what we consider

the effector suspension of the German debt break.

It's the abolition of the German debt break because what it means is that the reforms agreed

will make the European rules the binding

constraint and the debt break will just basically be sort of a shadow, sort of a ghost in the

background. It will formally exist but it doesn't have the same import. My understanding is that

the new, basically the new kind of exemptions or changes to the debt break would effectively

bring the like limit of deficit spending

up to potentially above the stability pack limit. No, that's right. That's indeed. That's absolutely

right. It's probably worth going through the actual decision that they took because they have

been discussing a number of things in the last few days. And one of the things that they were discussing

was a sort of an off-bushed vehicle for defense.

There were an awful lot of people who said, wonderful.

There were economists who made proposals of this.

This was the biggest nonsense I've ever seen because this would have been a really bad reform.

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