With elections looming and pressure mounting on Keir Starmer to up the pace of British military spending increases, the Prime Minister will find that there are no easy ways to find the funds. Michael Brzoska and Ian Davis argue that neither the case for the spending increases nor the trade-offs necessary to achieve them have been made to UK voters.
European NATO member countries are on the way to doubling their military expenditures, in line with the US-induced decision at the June 2025 NATO Summit to spend 5% of GDP on defence and security by 2035. Economic and fiscal instability from the ongoing war on Iran has further significantly complicated this decision, with already weak European economies struggling with inflation, debt and credit pressures, and a potential recession.
Currently, European states are largely financing this increased military spending through more public debt and by cutting other government spending. Development assistance is a prime target for cuts in many countries, including the UK.
In addition, several governments, with one of the loudest voices coming from Whitehall, try to alleviate concerns about increased military spending by claiming that it can become an engine of future economic growth. Rather than being a burden, it could become a boon, alleviating the economic pain of financing growing military budgets.
These three strategies hide the actual costs of increasing military expenditures. They either shift their burden to the future, to people in poor countries, or attempt to belittle the costs—all to make the financial consequences of greatly increasing military expenditures seem more palatable to voters.
Funding the surge in military spending
A recent study for NATO Watch estimates that total additional military spending by European NATO members to meet the 5% goal will amount to 5,100 billion Euros (€5.1 trillion) between 2025 and 2035 (in 2024 prices). If this money would be raised by cutting other government spending, 6% of current central government expenditure would have to be redirected towards military objectives. If it were funded through increasing debt, it would raise public debt by 19 percentage points, with large differences among countries. Increased military expenditures could also be covered by increasing government incomes, in practice taxes, which would have to be raised by 6% above current levels.
Among these options, raising taxes is the least popular. Its potential for undermining support for the government in power looms large. The same goes for reducing non-military spending that has personal consequence for voters, such as cuts in health care.
This leads to the preferred strategies of increasing public debt and cuts in non-military spending, which do not affect voters directly, such as development assistance.
While helping governments today, shifting costs into the future in this way invites trouble further down the road, and potentially even bigger outlays in the long run. Increasing debt means that future budgets will be increasingly burdened by interest and debt repayment. Cutting development assistance has the clear potential to increase instability and conflict in poor countries. In addition to its moral meanness, it raises potential future security threats for the UK and Europe. It will also make it harder for Europeans to win friends and allies in the wider world.
The impact of military R&D
To counter these bleak prospects, an old narrative about the economic good of military spending has been revived. The narrative is based on various examples of technologies with military origins, such as the microwave and jet engines.
The argument goes that beyond such cases, spending on military research and development (R&D) on rapidly advancing technologies, such as AI, will spin-off into civilian productivity. According to the UK Ministry of Defence: “As well as growing the economy as a whole, this Government is determined to boost regional growth across the UK. Defence has a key role to play in achieving these objectives”. Similar sentiments have been expressed in other European countries.
However, such predictions are at best overly optimistic, and, more likely, the result of wishful thinking by vested interests.
The first point to consider here is scale. Currently, military research and development (R&D) makes up 5% of government R&D expenditures among NATO member states. With increased military spending, this could grow substantially, depending on government funding of non-defence R&D spending.
These numbers look much less impressive, however, when all R&D spending, including by private companies, is considered. Then the current share of military R&D is only 0.6%. Even a quadrupling of military R&D would not raise it above 3%. This was much different during and immediately after World War II, when military R&D dominated civilian R&D. Those times are long gone, and recent major technological innovations, including those based on AI, have been made with no, or little, military R&D support.
The second point is about the scope of military R&D spending. On the one hand, it is likely that the share of money devoted to new technologies, such as drones and AI, is larger for military than civilian R&D. On the other hand, the primary purpose of military R&D should be, and generally is, more advanced weapon systems. If there are technology gains that are useful for civilian markets, that is a side-effect.
In summary, it is very likely that increased military R&D will contribute to technological advances in fields of technology where military and civilian applications are close, such as AI. But the hope that this will be decisive, is wrong. More technology gains will continue to result from civilian R&D spending, particularly from the private sector.
Beyond R&D spending, few claim that there will be a positive contribution to future economic growth from increased military spending. That has been and continues to be the mainstream view in economics.
Hopes of avoiding the economic pain of increased military spending are misguided. This is, in of itself, no argument against investing more in defence—although it is our view that a truly coherent, project-specific case for such a massive increase is still lacking. But the costs should be known to voters and not shunted into the future.
Prof Michael Brzoska is an economist and political scientist who until 2016 directed the Institute for Peace Research and Security Policy (IFSH) at the University of Hamburg. He has published widely on economic and political aspects of peace and security, recently with a focus on procurement and defence industry issues.
Dr Ian Davis is the founder of NATO Watch, a Scottish Charitable Incorporated Organisation that works to promote public awareness and foster debate on the role of NATO in public life. He is also the Executive Editor of the Stockholm International Peace Research Institute (SIPRI) Yearbook and an Associate Senior Fellow within Conflict and Peace at SIPRI.
The views and opinions expressed in posts on the Rethinking Security blog are those of the authors and do not necessarily reflect the position of the network and its broader membership.
Image Credit: Simon Dawson / No 10 Downing Street via Flickr. Prime Minister Keir Starmer visits King Fahd Airbase, Saudi Arabia, 08 April 2026.
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