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Europe in the new NATO era

23 June 2025 10:07 RaboResearch
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It is anticipated that NATO members will agree to a substantial ramp-up in their defense spending target this week. In this research note we look at the potential economic ramifications under various assumptions in four scenarios. Some key highlights are that execution determines impact: well-executed strategies can raise euro area GDP by up to 3.4% by 2045, while poorly executed approaches yield negligible returns. We discuss seven conditions for successful implementation. We also explain that short-term fiscal costs should be weighed against long-term economic gains; that private investment may benefit from crowding-in effects; and that defense R&D can act as a long-term growth lever.

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Marketing communication / Non-Independent Research. This publication is issued by Coöperatieve Rabobank U.A., registered in Amsterdam, and/or any one or more of its affiliates and related bodies corporate (jointly and individually: “Rabobank”). Coöperatieve Rabobank U.A. is authorised and regulated by De Nederlandsche Bank and the Netherlands Authority for the Financial Markets. Read more