Europe is channelling billions into weapons production amid the Russia-Ukraine war, betting defence spending can revive sluggish economies. But can tanks and missiles truly deliver growth?<\/p>\n
The continuing war in Ukraine is restructuring Europe\u2019s economic priorities, with governments across the continent funnelling billions into weapons production in the hope that defence spending can simultaneously deter Moscow and revive sluggish domestic economies.<\/p>\n
At MBDA\u2019s missile launcher facility in Bolton, Britain\u2019s Armed Forces Minister Luke Pollard watched as engineers demonstrated microelectronic chips \u2014 \u201cthe brains of the missiles.\u201d The demonstration came as London signed a \u00a3118 million ($158 million) contract with the European weapons maker to build six surface-to-air launchers.<\/p>\n
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Highlighting how governments are now openly linking military build-up with economic recovery, Pollard was quoted by The New York Times as saying \u201cDefence is the engine for growth”<\/p>\n
Billions flowing into defence<\/strong><\/p>\n The trend extends well beyond Britain. Germany\u2019s Rheinmetall is hiring 8,000 workers, partly to offset job losses in the country\u2019s struggling auto industry. Italy has joined the EU\u2019s new defence investment program while Prime Minister Giorgia Meloni is courting weapons manufacturers to channel defence projects into civilian benefits.<\/p>\n The European Commission\u2019s chief Ursula von der Leyen summed it up bluntly: \u201cEconomic strength and Europe\u2019s plan to rearm are two sides of the same coin.\u201d<\/p>\n The shift is also geopolitical. Last month, the United States and NATO unveiled the Prioritised Ukraine Requirements List (PURL), a mechanism promoted by President Donald Trump and NATO Secretary General Mark Rutte.<\/p>\n Under PURL, Washington is releasing military hardware from its stockpiles in $500 million tranches for Ukraine, while the Netherlands pledged \u20ac500 million ($577 million) and Scandinavian countries jointly committed another $500 million. Sweden said its contribution would cover air defence systems, Patriot munitions, anti-tank weapons and spare parts.<\/p>\n The economic gamble<\/strong><\/p>\n The spending surge represents a reversal of the post-Cold War \u201cpeace dividend,\u201d with governments cutting back on social spending to expand military budgets. Britain\u2019s Prime Minister Keir Starmer has promised a \u201cdefence dividend,\u201d framing the build-up as a \u201conce in a generation\u201d opportunity to boost jobs and industrial capacity.<\/p>\n But economists as reported by the NYT, remain divided. Kenneth Rogoff of Harvard University warned: \u201cThere\u2019s nothing good about having to buy a tank instead of building a school.\u201d Research shows that while every dollar of military spending increases GDP by about 50 cents, investments in education or infrastructure yield much higher returns.<\/p>\n STORY CONTINUES BELOW THIS AD<\/p>\n Others stress that long-term benefits hinge on channelling money into research and development (R&D). Historically, innovations like GPS, the internet and digital imaging emerged from defence-funded research.<\/p>\n \u201cBuying the same old equipment from the same old producers provides limited incentives to innovate,\u201d Ethan Ilzetzki of the London School of Economics told NYT, who co-authored a Kiel Institute report on Europe\u2019s defence economics.<\/p>\n Political stakes<\/strong><\/p>\n Still, the promise of jobs is politically irresistible. MBDA has hired 2,500 workers in the past year, with plans for 2,600 more by year\u2019s end. Rheinmetall\u2019s new munitions factory in Germany will create 500 jobs. Pollard argued that governments must make the case that military spending not only strengthens security but \u201chelps create jobs; it grows the economy.\u201d<\/p>\n Whether this defence-driven economic push will pay off remains uncertain. The European Commission projects only a modest boost \u2014 0.3% to 0.6% of EU economic output by 2028. But with Russia\u2019s war grinding on, leaders appear willing to wager billions that the path to both security and growth runs through their weapons factories.<\/p>\n","protected":false},"excerpt":{"rendered":"Europe is channelling billions into weapons production amid the Russia-Ukraine war, betting defence spending can revive sluggish economies.…\n","protected":false},"author":2,"featured_media":380511,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5174],"tags":[2000,299,132415,5187,52160,132421,132419,132417,132422,132416,132418,7661,132423,132420],"class_list":{"0":"post-380508","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-eu","8":"tag-eu","9":"tag-europe","10":"tag-europe-defense-spending","11":"tag-european","12":"tag-european-economy","13":"tag-keir-starmer-defense-dividend","14":"tag-mbda-uk","15":"tag-military-jobs-europe","16":"tag-nato-purl","17":"tag-nato-weapons-funding","18":"tag-rheinmetall-germany","19":"tag-russia-ukraine-war","20":"tag-trump-nato-ukraine-plan","21":"tag-ursula-von-der-leyen-defence"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/380508","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=380508"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/380508\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/380511"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=380508"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=380508"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=380508"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}