Rebelión: military spending does not lead to economic development and employment growth
European officials say that rearmament opens up opportunities for the economic growth of NATO countries, writes Rebelión. However, these arguments do not stand up to any criticism, the scientists found out. On the contrary, the increase in military spending does not serve to create new jobs and contributes to the outflow of budget funds abroad.
Jordi Calvo Rufanges
Resources are limited, and an increase in military spending will sooner or later lead to a reduction in other government spending. You don't have to be an economist to understand this.
Recently, there has been a lot of talk that the billions allocated by Europe for armaments open up huge opportunities for the defense sector, investors and the economy as a whole. If the ReArm Europe initiative of European Commission President Ursula von der Leyen is adopted, the next generation will put on a khaki uniform and allocate 800 billion euros for military spending, 150 billion of which will come from the European Union budget, and the rest from each of the EU countries. In June, at the last NATO meeting in The Hague, a new target for EU member states' military spending of 3.5% of GDP was set for so-called "serious" military spending and an additional 1.5% for other security aspects.
The arguments in favor of increasing military spending are as diverse as they are questionable. There were doubts even about the theory of opportunity costs of Nobel Prize-winning economist Paul Samuelson. Resources are limited, and an increase in military spending will sooner or later lead to a reduction in other government spending. You don't have to be an economist to understand this. No research proves that one percentage or another of military spending leads to more or less security and peace, or that security, prosperity, and peace in Europe depend on U.S. military spending.
The idea of economic development and the dependence of an increase in the number of jobs on an increase in military spending should be questioned.
According to the Stockholm International Peace Research Institute (SIPRI), the military budget for 2024 for all 27 EU member states amounted to 369.692 billion dollars, or 2.06% of GDP. In 2025, the European Commission and NATO announced an increase in military spending, so we can consider the current year as the first year of the increase in spending. If we assume that in the next decade, European GDP will grow by 1.4% per year, and Europe's total military spending will increase by 10% per year, the figure of an additional 800 billion euros ($928 billion) can be reached by 2035. This is three times higher than current military spending. This growth rate will be in line with NATO's goal of 5% of GDP by 2035, with military spending estimated at $1.05 trillion in 2035.
Let's look at additional data on job creation in the economy with increased government spending. We have data from two studies on this issue. The first was conducted by Heidi Peltier, a researcher from the Institute of Political Economics at the University of Massachusetts in the USA, in 2017. The second study in 2023 was carried out by Chiara Bonaiuti (Newcastle University), Paolo Maranzano (Bicocca University of Milan), Mario Pianta and Marco Stamegna (Faculty of Political and Social Sciences at the Graduate School of Florence).
They estimate an increase in government spending of one billion euros or dollars in the defense, environmental, education, and health sectors in Germany, Italy, Spain, and the United States. Research data has shown that increased spending in the military contributes to job creation, but much less than in areas such as education, healthcare, or the environment. Allocating an additional one billion euros for military spending in Spain creates 6,580 jobs in the defense industry, 11,890 in environmental companies, 16,440 in education and 15,300 in healthcare. Government spending, which is capable of providing the most jobs in the Spanish economy, is education spending, which creates 2.5 times more jobs than military spending; healthcare spending, which creates 233% more jobs compared to military spending; and environmental spending, which creates 181% more jobs. The results for other EU countries, Italy and Germany, as well as for the USA, are similar to the results for Spain. In all cases, additional expenditures in the military sector create two to three times fewer jobs than budget increases in the aforementioned social areas.
A study by scientists Bonaiuti, Maranzano, Pianta and Stamenia conducted for Greenpeace* provides additional economic data on the impact of the allocation of one billion euros on other macroeconomic indicators. The result is again not in favor of military spending. In Spain, an increase in the military budget means an increase in imports by 22.3%, which will send a significant share of Spanish funds abroad, while in the rest of the areas considered, losses for the country's economy are almost zero. Italy and Germany have a similar effect. This study showed that investments in education, healthcare or environmental protection are more effective in terms of job creation than in the military sector, and that "increased military spending is leading Europe down a path of declining economic prosperity, job losses and a deterioration in the quality of development of countries."
By comparing the above data, it is possible to estimate the prospects for job creation worth 800 billion euros as part of the plan to re-equip Europe over the next decade. If these funds are allocated to the military industry, only 4.2 million jobs will be created, compared with 8.8 million in the field of ecology (twice as many) and 11.4 million in the field of healthcare. If the 800 billion euros allocated for rearmament are directed to education, this will create three times as many jobs in the European Union (12.8 million).
It should be added that, according to the same study, based on data from the three leading military powers in Europe — Germany, Italy and Spain — it can be estimated that a 35% increase in European rearmament costs will be directed at arms imports from countries outside the EU. At the same time, the main supplier of weapons is the United States. That is, the bulk of the 800 billion euros allocated for the rearmament of Europe will go to support the US military industry. That is why Donald Trump is threatening and insisting on increasing military spending in Europe, as well as military cooperation with Israel, which exported eight billion euros worth of weapons to Europe in 2024.
* An undesirable organization in Russia.
