A view from London

Europe's security is based on American might. Last year, the International Institute for Strategic Studies (IISS) estimated that European NATO members would face costs of $226 to $344 billion just to replace US military equipment stationed in Europe. This estimate excludes the cost of maintaining the presence of over 120,000 US troops in Europe and US intelligence, cyber and nuclear capabilities.

Europe has been spending more on defence. Defence spending has risen from 1.4% of GDP in 2014 to an estimated 2.3% last year. NATO’s new target, agreed at a summit last year, is 3.5% of GDP by 2035.

Countries closest to Russia are, unsurprisingly, most focussed on defence. Poland already spends more than 3.5% of its GDP on it. Germany plans to meet the NATO target in 2029, six years early. UK, France and Italy say they will meet it in 2035 but have not set out how they will pay for it. Some NATO countries, including Spain, have not committed to hitting the target by 2035.

Many NATO countries failed to meet the old 2.0% spending target and there is no certainty that the new one will be met. The perception of the urgency of the task varies across NATO member states.

Europe could rearm more quickly. Poland more than doubled defence spending from 2.2% of GDP in 2022 to 4.7% in 2025, turning it into a major military power. The invasion of Ukraine has had a transformative effect on Germany’s attitude to defence. Not only does Germany plan to increase defence spending to 3.5% of GDP by 2029, up from 1.5% in 2022, it has put in place the borrowing needed to finance it.

Britain’s experience in the 1930s also holds lessons. Appeasement was a central plank of Britain’s foreign policy in the late 1930s, but so, too, was rearmament. Between 1933 and 1938, UK defence spending rose from 2.2% to 6.9% of GDP. Spending initially rose slowly, but Hitler’s annexation of Austria in 1938 swept aside concerns about cost and debt, causing a surge in spending which took the defence budget to a wartime peak of 50% of GDP.

NATO has set a new target for defence spending. But the real test is about finance. Countries that want to rearm will find the money. Those with low levels of public debt including Germany, Poland, the Nordics and the Baltics can borrow. Many, including France, Italy, Spain and the UK, are more indebted and may have to lean on taxes and cuts to other areas of public spending.

War involves willing the end - and the means. Reflecting on the lessons of the 1930s, journalist and writer Paul Mason said, “faced with an existential threat, it is more advisable to begin from a calculation of what is needed [for the defence of the nation], not what can be afforded according to peacetime fiscal norms” (The Council on Geostrategy magazine, May 2024).