Higher defence spending may increase capacity pressures moderately

Kim Abildgren, Rasmus Mose Jensen, Rasmus Rold Sørensen, Dominic Cucic and Emil Holst Partsch

EconStor Research Reports from ZBW - Leibniz Information Centre for Economics

Abstract: Russia's invasion of Ukraine has prompted Denmark and other European countries to significantly boost their military spending. A scenario analysis suggests that meeting the new NATO target of 3.5 per cent of GDP in core defence spending from 2026 onwards may add moderately to capacity pressures in the Danish economy over the next few years. The impact on capacity pressures will depend on several factors including how quickly defence spending is increased and how much of the funds will be spent abroad.

Keywords: defence spending; capacity pressures; NATO; fiscal policy; Denmark (search for similar items in EconPapers)
JEL-codes: E62 H56 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-cis and nep-tra
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