March 19, 2024 - 7:00am
After two years of verbal commitments by Nato’s European members to drastically increase their defence spending, the budgetary realities are starting to hit home. A new study by Germany’s Ifo Institute shows that in order to meet their target spending of 2% of GDP, European Nato members will need to increase spending by €56 billion every year. This report comes only weeks after the European Commission signed off on a €50 billion aid package to prop up Ukraine’s reeling economy.
A significant amount of the budgetary shortfall among European Nato members falls on those that are fiscally the weakest. After Germany the largest shortfalls were €11 billion in Spain, €10.8 billion in Italy and €4.6 billion in Belgium. All three of these countries have debt-to-GDP ratios of more than 100% of GDP. Italy is in particularly dire straits, with the largest budget deficit in the EU at 7.2% and 9% of its budget being used just to pay off interest owed.
Yet the 100% figure is just an arbitrary headline-grabber. A better metric is a debt-to-GDP ratio of 60%, which is the debt limit set in place by the Maastricht Criteria, laying out the rules that underly the single currency in the Eurozone. On this metric, 13 of the 27 EU members — nearly half — are over the limit. It is therefore unsurprising that the German report has been published at a time when many European countries are engaged in extensive budget cuts.
The problem with military spending is that, unless there is a war, the country that undertakes it receives nothing for its money. Poland, the only European country that has truly matched its militaristic rhetoric with actual spending, is an instructive example. In 2023 Warsaw’s military spending was around €15 billion over the 2% of GDP target. Yet this spending came at a time when the country’s GDP was growing at only 0.6% annually, the tenth-slowest rate in all of the EU. Poland’s slow growth is not, of course, caused by its high military spending — but that money could have been deployed to promote development (e.g. by building infrastructure).
This raises a question that no one in Europe seems to be asking: in the 21st century, will a country’s relative power and influence be determined by the size of its military or by the size of its economy? A glance at some statistics suggests that relative military size is not an adequate predictor of power and influence. China and America have top-10 armies and are highly influential, but India, Iran, North Korea, and Pakistan do too and are much less so.
Debates around spending priorities will be particularly sharp in countries such as Sweden, which has just acceded to Nato. The German report shows that Sweden is currently €3 billion short of its military spending target. Are Swedes willing to sacrifice a slice of their welfare system to put their money where their mouths are? If they do, it will come with a nasty sting given that Sweden’s GDP contracted 0.7% in 2023 — the second-worst fall in Europe after Estonia.
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SubscribeIdiot.
The 2% NATO spending target – it’s actually a formal commitment by akll NATO members – is for countries to *defend themselves*. Nothing to do with Ukraine.
If you don’t have adequate defence and simply concentrate on becoming richer at some point someone who has spent on defence will come knocking to plunder what you’ve got.
What articles such as this forget is whether Europe can afford not to keep funding Ukraine. There’s a reason countries like Poland are spending heavily on defence – they are well aware of what happens if they don’t.
India’s high military spending is dictated by Pakistan, Pakistan’s is prompted by India. While these disputes are certainly big, they are very complex and largely misunderstood or unnoticed outside the two countries.
They provide a ready supply of provocations, which removed from the drivers that probably underlie them – climate and drought – are such that Westerners find them insignificant or comic. Until a wave of refugees arrives,
Military expenditure here actually diminishes the standing of both countries.
India’s high military spending is aimed at China. Even its nuclear arsenal points that way.
EU governments spend around €3 trillion annually on social protection transfers, and around €2 trillion on health. They spend less than €200 billion p.a. on defence. If social protection spend was frozen in nominal terms for a couple of years, defence expenditure could be doubled. This is not a matter of affordability. It’s a matter of priorities. Mr. Pilkington seems to think that giving Russia and China everything they want would be cost free.
Precisely-its about priorities.The Western Nato countries have had the luxury of spending the “peace dividend” on extensive welfare programmes and defence was generally the sacrificial lamb in budget cuts.So-whats the priority now-which is precisely what Governments are elected to decide and are patently not up to the task.
Right you are. The EU is composed of some of the wealthiest nations on the planet, most individually wealthier than Russia. They can afford to fund this war to whatever degree is required.
Great post.
Stop importing savages from Muslim countries and Africa and stop payments to benefit scroungers.
You would save at least 100 billions per year in uk alone.
It is obvious what needs doing.
The only problem is lack of will.
Then we hear that Penny Mourdant is a solution to Conservative Party and country problems.
‘The problem with military spending is that, unless there is a war, the country that undertakes it receives nothing for its money.’
Really Mr Pilkington? It’s exactly like insurance. If you don’t have it, there’s a reasonable chance that the long term costs will be so much more. Far better to have it.
Not only that, but failing to take into account: employment and training, life skills, manufacturing skills, leadership skills… all worth “nothing” to Mr Pilkington.
Unless Russia and China are doing it, in which case it’s the best thing since sliced bread
This is the best comment so far, especially with the mess that young men find themselves in these days. What have we got? 50% of them are growing under the loving wings of single mothers, their masculinity declared toxic, their educations an embarrassment and their prospects dim. A solid military would provide them with structure, training, an appreciation for what they are truly capable of (and a demand that they provide it) and a way forward other than dependency on the parasite class.
Dunderheaded nonsense.
Part of the role of the armed forces, particularly in peacetime, used to be on learning a trade and skills, and expanding horizons for those who weren’t on track for university (both upper and working classes).
So, to cross-over from today’s other article on cuts to vocational training, isn’t there an arrangement here whereby the forces are seen as having a broader societal role in developing skilled, trained men and women who are used to hard (and physical) work? Universities don’t need to be the only option when it comes to education, and maybe that creates a way of justifying more forces funding.
And also the maintenance of a high technology manufacturing sector that the UK in particular might otherwise have sent abroad.
But that requires a strategy. One of the distinctive features of the UK is has been its long-standing aversion to strategy in this an other fields.
Examples of this include, for example, the cancellation of Black Arrow on cost grounds – even though (I believe) it was the cheapest route to orbit then devised. (Apparently NASA offered to put payloads in orbit for free and then reneged after the project was cancelled)
Or take the conversion of the UK phone system to fibre optics – abandoned in order to facilitate privatisation of BT in the 80s – wasting our opportunity to have the fastest internet in the western world (our peers at the time were Japan and Korea).
Or the sale of ARM to the Chinese
etc ad nauseam
C’Mon Saul, we need more “gender studies”, whatever that is.
“The problem with military spending is that, unless there is a war, the country that undertakes it receives nothing for its money.”
It’s funny how western governments are apparently just fine with deficit financing their consumer economies, but not with deficit financing defence. The point is that propping up consumerism also doesn’t get us anything for the money, apart from a few more voters willing to vote for whoever is in office.
So, firstly I don’t for a moment accept the logic of that argument, or secondly that Western governments even think they face such a choice anyway. And that’s leaving aside the crucial fact that if a nation’s military shrinks to the point where its adversaries consider the risk of aggression to be worth it, it’s too late to fix the problem by increasing spending, as Europe has just discovered to its immense cost. Look at what a war that’s not even in the EU has done to EU economies! Can it really be possible we’re governed by people so stupid that they cannot put two and two together to make four where this is concerned?
No: I say that this article simply fails to describe the choices and tradeoffs presently under discussion in Europe. Defence spending during peacetime does not get “nothing” for the money, and I would be very surprised if any intelligent policymaker seriously believes such an idea.
Not mentioned in this article is that while there are 32 members of NATO, the vast majority located in Eastern and Western Europe, it’s the United States of America that’s funding over 22% of the organization’s annual expenses. What happens if it becomes both politically and financially untenable for the U.S. to continue to overcommit to the funding of an organization which basically exists to keep Russia at bay within the European Continent?
What happens if due to financial constraints, and a potential change in the U.S. military’s strategic emphasis from the Western to the Eastern Hemisphere, that the powers-that-be in Washington D.C. decide to ratchet down its current troop count and operational military bases in Europe?
“What happens if it becomes both politically and financially untenable for the U.S. to continue to overcommit to the funding of an organization which basically exists to keep Russia at bay within the European Continent?”
Not if. When. And “when” is likely to be later this year when Donald Trump wins the US election. And it’s not even as if Trump is an outlier on this issue anyway: Barack Obama prior to 2016 was saying exactly the same thing about the attitude of European governments to who pays for NATO. The Americans will not keep paying for it, and it would be childishly silly to complain about that simple fact of life.
A tired reminder v the United States and its military budget. We have managed to prop up the security of Europe for decades. One reason being our relative lack of social welfare spending. Somehow we manage to get along with less (still too much IMO). I presume it comes down to trading social welfare expense for military preparedness.
I disagree with the central premise of this article that you don’t get anything for your defence spending unless you have a war.
First of all, because defence spending is subject to a similar fiscal multiplier effect as other government spending. Depending on your point of view, defence spending may not go on the things which one thinks are a priority, but it does circulate back around the real economy.
More importantly though, what you get from defence spending is defence, which includes things like deterrence and negotiating leverage. At least you should if you spend enough of it on the right things.
Given its history its no surprise that Poland is particularly conscious of the need to maintain a robust military stance even in ostensibly peaceful times. Its too late when enemy boots are once again marching through their country.
Depending where you spend it of course. If you send your defense spending on locally manufactured kit then it re-circulates. If you just buy it off the Americans, perhaps not so much:
Thunderbolt, Polaris, Trident, The F-35.
Defense spending buys you peace.
“It’s better to tend the vines in your vineyard than to plant and tend its hedge,” says the author. “Better to grow lush grapes than to make sure your hedge is thick and tall, that your watchman is vigilant, strong, and well-armed.” Until your neighbor casts a covetous eye on your lush acres, that is.
There’s so much wrong with this short piece it’s hard to know where to start.
“The problem with military spending is that, unless there is a war, the country that undertakes it receives nothing for its money.” Clearly, the author hasn’t read Mary Harrington’s piece today, pointing out how much post-war Britain benefitted from a large number of people with military training, both from a skills and attitude to problem-solving perspective.
Given that the Swedes have recently volunteered to give up decades of neutrality, I’m pretty sure they are ready to sacrifice a slice of their welfare spending to ensure their protection from a hostile Russia.
And how can Pilkington suggest that Iran is not highly influential? The Iranians seem to have everyone dancing to their tune, in the Gulf, in the Red Sea, in Gaza and in Western capitals. They have achieved this partly by having a large military but mostly by having a very clear idea of what their national interest is and relentlessly pursuing it, without worrying about whether the wokerati approve.
Glad to see this question being put. Ieff there was a real threat, not to mention a real attack on Europe, people would grasp that resources would have to be found. But, despite incessant propaganda, the idea of a strategic Russian threat to Europe is less and less plausible, sustained mainly by hazy memories of World War Ii and its aftermath.
Since the fall of the wall Russia’s sought mutually beneficial exchange with exchange with Europe and Putin mutual security with the West. If the carpet’s been torn up here and there, that’s followed the initiatives of others not them. So European populations can ask their governments to pursue peace and reconciliation rather than paying more for less ‘security.’
All of which is a roundabout way of the author saying he does not think Europe faces a military threat.
Which may or may not be true. But don’t get all worked up when some in America question how much they should spend to protect countries across the Atlantic from a threat that many/most Europeans’ revealed preferences suggest they do not believe.
What’s this peacetime?
Britain had its armed forces engaged in an active conflict every single year from 1914-2014. In fact with only a handful of dormant years, we have an unbroken stretch of fighting years going back centuries – a record of bellicosity unrivalled by any other nation. Happily, after a few years out of the saddle we are getting back into our stride over Yemen and also, if the Germans are to be believed, in Ukraine too.
Much of State spending has no tangible return – and rightly so, investments that are directly money-making should be made by the private sector, not the public sector.
There are sectors – health, education, utilities, infrastructure – where there is a legitimate debate about the relative roles of private investment and profit-making and State regulation. Properly done, spending on these sectors generate huge but difficult-to-internalise returns for society. But here as well, high spending is no guarantee of positive outcome – one need only look at US “health care” spending.
Far more important to the level of military spending, whether in absolute terms or in terms relative to GDP, are the questions (i) what is our strategy; and (ii) is it spent wisely with a view to achieving that strategy?
Right now, we don’t have a strategy. If you don’t have a strategy, you cannot spend wisely.
The first step would be to develop a strategy. In fact, a defensive strategy is much cheaper than a power-projection strategy.
Then, also, a State’s security is not solely, not even primarily a function of its military. At least as important it its diplomacy. But in Europe – after all an entity that has no military – we are saddled with a “chief diplomat” who openly says that the decision will be made on the battlefield.
“The problem with military spending is that, unless there is a war, the country that undertakes it receives nothing for its money…”
Just as we receive nothing much from our gigantic Foreign Aid budget (which actually struggles to meet it’s own vast expenditure targets), and the many of the quangos, think tanks, and civil service departments that we fund.
And from some, we receive worse than nothing – a negative, certainly the case with the hundreds of “charities” that we fund, which are fronts for one form or another of political activism and agitation, including Islamism. And also the case with our government and its institutions which have rotted with idleness and corruption to the point where many of us believe that we’d actually be better off without any of it.
Or the other elements of our public sector that we fund including our spavined and corrupted education service, the gigantic third sector large charities which use the funding to employ rapists and abusers, overseen by legions of exuberantly paid management layers, and also to buy expensive broadcast advertisements for yet further funding.
And then there are the millions upon millions of working age benefit recipients many completely able to work, and contribute to the economy, but declining to do so as the idea of working for money is alien, or simply not attractive to them.
So yes, there’s a lot for which we get very little return. But with military spending we actually get something very valuable. Namely peace of mind and a sense of safety and security. And a force of thoroughly professional people who actually believe in our country and are prepared to fight to defend it.
I think that’s more important that any of the other things on that list above
Has Philip Pilkington heard that Russia has invaded Ukraine? Could someone please tell him?
You cannot judge whether military expenditure is excessive or not, unless you assess the enemy threat. Pre-1989, spending on defence in the UK was around 5% of GDP. This was not because the UK government was flush with cash. It was because of the military threat of the USSR. The disintegration of this threat allowed military expenditure to drop to below 2% of GDP. Poland spends more proportionately on defence today, not because the Poles are a warlike people. They are not. Historically, they have been the victims of aggression from Germany and Russia. They spend highly on defence because they feel threatened by Russia.
The link between government spending on generic “infrastructure” (almost always transport) and economic returns is very unclear. Governments love the idea that they can dish out a fixed parcel of money and generate generic wealth everywhere but the evidence for it is poor, and the evidence it’s often wasted is strong.
Then Europe needs to spend *vastly* less on other stuff (which is should anyway), because being able to confront Imperial Russia is existential, not optional.
The idea that Russia is able, or wishes, to invade Europe is Neocon fantasy or more likely scaremongering for profit.
But indeed Europe needs to spend less on other stuff…in order to reduce taxes and allow real growth.
So Ukraine is not Europe in your view?
Thinking that Russia when successful in Ukraine would stop there is pretty naive.