Fiscal aspects of European defence spending: implications for euro area macroeconomic projections and associated risks

Cristina Checherita-Westphal, Christian Huber, Marta Rodríguez-Vives and Georg Müller

Economic Bulletin Boxes, 2025, vol. 5

Abstract: EU government spending on defence is expected to increase in response to heightened geopolitical tensions. This increase underpins efforts towards reaching a higher NATO defence spending commitment, as agreed at the NATO summit of 24-25 June. This box explores the implications for the euro area baseline projections and the risks around the baseline, as reflected in the June 2025 Eurosystem staff macroeconomic projections. JEL Classification: E62, H56, O40, E31

Keywords: defence spending; economic growth; Fiscal policy; inflation (search for similar items in EconPapers)
Date: 2025-08
Note: 1790315
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