STRASBOURG: Germany will escape EU punishment for breaking the bloc`s budget rules because of a defence spending exemption, the European Commission said on Tuesday.

Germany`s public deficit is expected to be above three percent in 2025, but it will not be punished because it is `fully explained by the increase in defence spending`, the EU executive said.

Under the budget rules, a state`s debt must not go higher than 60 percent of national output, with a public deficit of no more than three percent.

But earlier this year, Brussels allowed states to splash out up to 1.5 percent of national output on defence for four years without fear.

Germany was among 16 states, including Denmark and Poland, to seek exemptions.

Berlin usually calls for budgetary discipline in the European Union, but with Europe facing greater threats from Russia and fears of the bloc falling further behind China and the United States, it has itself pivoted on spending. German Chancellor Friedrich Merz this year relaxed strict debt rules and unleashed a spending blitz on infrastructure.-AFP