Europe is entering a new defense era. After decades of reducing defense budgets, EU countries are now dramatically increasing military spending. By 2024, EU defense expenditures will reach 1.9% of GDP, with 2.1% projected for 2025, and NATO demanding 5% by 2035. This amounts to hundreds of billions of euros in additional annual spending already planned by several countries.
The main reasons include Russia's invasion of Ukraine and potential changes in US policy that could see decreased American support for European security. This has driven European countries to ramp up weapons purchases, ammunition, and restore defense production capacities.
Politicians across Europe argue that increased defense spending can also boost economic growth, especially in deindustrialized regions. In Barrow-in-Furness, UK, a town with a long submarine-building tradition, new defense orders are bringing jobs back. Similar expansions are underway in Germany and other nations.
However, economists warn that the economic multiplier of military spending is lower than that of investments in infrastructure, energy, or education. Without expanding factory capacity, higher defense spending may simply drive up prices rather than significantly increase output. A stronger effect could come from government investments in research and development and by supporting small, high-tech firms.
Another challenge is bureaucracy: large contractors dominate defense deals due to their capacity to wait for lengthy formalities and payments. Public attitudes have also shifted — where once rising military spending was seen as a burden, it is now viewed by some as a means of job creation and economic renewal.
Analysts note that defense outlays do create jobs and boost technology in some regions, but whether this will replace other declining industries remains uncertain. Future benefits depend on strategic focus and concentrated investment in key technological sectors.
Europe’s core issue is whether it can effectively invest in both security and technological development to remain competitive globally.
