Research
Europe has dramatically accelerated defense spending — up 20% in 2025, with all NATO members now exceeding 2% of GDP and a new commitment to 5% by 2035 — but whether this requires dismantling the welfare state depends almost entirely on which countries you examine: high-debt nations like Italy, France, and Belgium face genuine fiscal constraints, while the broader European average (40% GDP tax take, 25% GDP on welfare, 1.65% on defense) suggests substantial room to increase military spending without matching American welfare austerity. The sharpest unresolved tension is not values but arithmetic — critics of the trade-off narrative are largely correct at the European aggregate level, but largely wrong for the specific high-debt states that dominate the political conversation. Readers focused on fiscal sustainability in Southern Europe, defense procurement reform, or the expiration of EU fiscal escape clauses in 2028 will find the most consequential gaps in this briefing.
Notes: Figures for 2024 and 2025 are estimates. The NATO Europe and Canada aggregates from 2017 onwards include Montenegro, which became an Ally on 5 June 2017, ...
In 2025 alone, European allies and Canada increased defense spending by 20 percent from the previous calendar year, with all allies now ...
Figure 1: Public social spending is worth 21% of GDP in 2022 on average across the OECD but levels differ greatly across countries · Figure 2: ...
With the Ministry of Defense spending about 31 billion euros ($36 billion), or about 1.6% of GDP, an increase to 5% by 2035 seems objectively ...
Previously, in 2006, NATO Defence Ministers agreed to commit a minimum of 2% of their GDP to defence spending. The combined wealth of the non-US ...
Berlin in 2024 reported 2.1 percent of GDP on defense spending, exceeding the alliance benchmark for the first time since 1990. But the increase ...
Today, social protection accounts for nearly 40 percent of all public spending across the European Union. Over the past 75 years, each time a ...
In Northern Europe, where the welfare state is more robust – and, admittedly, more expensive – the employment rate is significantly higher than ...
France's social spending is among the highest in the world and is an important source of budget rigidity and cyclicality. The Covid-19 crisis ...
Current healthcare expenditure in the EU was €1 720 billion in 2023. This was equivalent to 10.0% of gross domestic product (GDP).
The average European government spends 25% of GDP on welfare and 1.65% on defense (OECD, 2023a), (SIPRI, 2023). Even increasing defense to U.S. ...
(Stockholm, 27 April 2026) World military expenditure reached $2887 billion in 2025, an increase of 2.9 per cent in real terms over 2024.
Abstract. This article analyses the revenue capacity at the “centre” of the EU. It first outlines major elements (“segments”) of EU.
The EU is expected to allocate more money to defense, energy, competitiveness, and enlargement, but with little fiscal room to maneuver. As ...
Europe could need 300000 more troops and an annual defence spending hike of at least €250 billion in the short term to deter Russian ...
In Europe, significant further expansion in defence budgets will be required in some high-debt countries (including Belgium, France,. Italy, Portugal and Spain) ...
A persistent and potentially dangerous myth is that Russia is unable to sustain its military expenditure.
European defense spending is not strengthening European military capacities and may even lead to greater fragmentation in the splintered ...
This study explores the causal relationship between the economy and the elderly population in 15 European countries.
This trend suggests that financial markets are not overly concerned about rising European public debt, which is used to finance defence ...
At the start of March, Macron announced that France will spend between 3 to 3.5 percent of its GDP on the military, and called for the EU to ...
The impact on economic activity and EU government debt of a linear increase in defence spending by up to 1.5% of GDP, starting this year and until 2028.
As such, a relative majority (43%) believe that “it is urgent to increase the Union's investment in defense to 5% of GDP in order to protect ...
At €59 billion in 202420, France's annual defence spending is historically lower than that of the United Kingdom, which stands at €76 billion.
For all countries, there will be a need for higher expenditure over the medium and long term to respond effectively to population ageing.
In France, a March 2025 Ipsos poll found 68 per cent of respondent were in favour of increasing defence spending (dropping to 52 per cent among ...
This study argues that in order to raise European strategic autonomy and effectively deter malevolent great powers EU member states will ultimately have to ...
As a NATO Ally, the Netherlands has committed to bringing its core defence spending up to 3.5% of its GDP by 2035 – up from an estimated 2.49% ...
As public budgets are constrained, the welfare state is a candidate for savings, which could lead to a trade-off between military and social expenditure. Our ...
Here, we outline seven major converging interests. These areas should form the basis for a common defence and climate agenda which would allow the EU to ...
According to the same survey, Italians stand out from the European crowd in their strong opposition to significantly higher defence spending.
Larger R&D share and greater domestic content of procurements would strengthen the economic impact of defence spending. The majority of the ...
In the first half of 2025, the Commission proposed several key initiatives to boost European defence readiness and investment: the white paper for European ...
First, governments can increase defense expenditure by simply running larger deficits and accumulating additional debt. Germany has some fiscal ...
RRPs de-emphasise how much welfare state they want while consistently and clearly defending the traditional welfare state's consumptive focus against ...
A multiplier of zero means that higher defence spending will come entirely at the expense of other economic activities, generating no additional increase in GDP ...
On 3 September 2025, the Commission adopted a second package of sectoral proposals, completing the framework for the next long-term EU budget for 2028-2034.
A persistent but gradual increase in military spending of 1% of GDP over three years is associated with a two-year GDP multiplier of 0.93 and a two-year impact ...
A benchmark in the debate on defence efforts is the so-called NATO 2% target, according to which a minimum of 2% of GDP was to be spent on defence.
The Debt Sustainability Monitor 2025 provides an overview of fiscal sustainability challenges faced by EU Member States over the short, ...
Boosting Innovation Through Defence R&D. Defence spending presents a powerful lever to accelerate research and development (R&D) in critical sectors.
Climate change poses an increasing risk to public finances. ... The EU Debt Sustainability Analysis (DSA) framework is the central instrument used ...
Right now, the stars are aligned to address the EU's security and competitiveness crises with a new tool: increased defence budgets.
Russia is perceived as the main security threat. The public's perceptions of threats to global peace have intensified, with a significant ...
Five EU Member States still saw their public debt exceeding 110% of GDP in 2021: Greece (194.5%), Italy. (150.3%), Portugal (125.5%), Spain (118.3%) and France.
A joint approach to defence as a European public good is the only viable option for EU countries to spend 5% of GDP on defence.
A basic Keynesian perspective would see military spending as simply one component of government spending, with effective demand/multiplier effects. In this way ...
This chapter studies the macroeconomic conse- quences of ramping up defense spending, considering potential intertemporal trade-offs, in which a country's.
By the end of 2024, eleven eurozone countries had public debt exceeding the 60 per cent limit. By the end of 2025, Greece had the highest debt ...
It will provide EUR 150 billion of loans to Member States for defence investment. This is basically about spending better – and spending together. We are ...
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