From Brussels to Berlin, European leaders are preparing to invest hundreds of billions in rebuilding their armies as a response to the United States no longer guaranteeing their security. However, these leaders also hope that the influx of money will strengthen the continent’s struggling industrial sector and spur economic growth. This connection between defense spending and competitiveness is likely to be discussed at an upcoming meeting in Brussels, following the European Commission’s release of a paper on the future of European defense. Ursula von der Leyen, president of the European Commission, emphasized that economic strength and Europe’s plan to rearm are closely intertwined.

However, there are significant challenges to Europe actually achieving this economic boost. The continent’s defense industries are relatively modest, with France and Germany leading the way in expansion efforts. Additionally, Europe has relied heavily on imports of American arms, making it ill-equipped to immediately absorb new military spending. Nevertheless, European leaders are determined to keep both the security benefits and the economic impact of building weapons within European hands.

President Emmanuel Macron of France is pushing allies, including Germany, to purchase French missile-defense systems rather than American ones. This shift could result in European nations buying domestically rather than from other European countries, creating redundancy and potentially diminishing both economic and strategic benefits.

To encourage investment, the European Union has proposed a 150 billion euro loan program and loosening fiscal rules to allow individual nations to spend more, which could result in over $710 billion in additional spending. Despite these challenges, economists predict that the defense buildup will provide some benefit to European growth, with Goldman Sachs estimating a modest bump in the

Source: https://www.nytimes.com/2025/03/19/world/europe/can-europes-new-military-spending-help-its-economies.html