As Vladimir Putin ramps up spending on his military, Europe’s war chest is shrinking.
When UK Chancellor Jeremy Hunt last week delivered what might be his final budget ahead of the country’s general election, he mentioned taxes 52 times, the National Health Service 23 times and migration four times.
Vladimir Putin is ramping up military production and Western leaders increasingly fear he will test NATO’s resolve that an attack on one member is an attack on all. NATO is yet to reveal which countries this includes, but the three largest European economies, Germany, the UK and France, will hit the target. The fourth-largest, Italy, is still woefully short after spending only 1.46 per cent of GDP last year and warning the share could fall further.
Meanwhile, the focus of the US is drifting away from Ukraine and towards Asia, experts say. An election that could return Donald Trump to power nears in November. There are three main ways of raising more money for defence on a permanent basis, says Schlepper. The first to increase taxes at a time when many European countries are already struggling to recover, a “very risky bet”.Marcel Schlepper, Ifo Centre for Public Finance and Political Economy
The situation is not much better in Germany, where public finances were plunged in chaos at the end of last year after a court ruling declared its budget illegal for breaching a law against taking on new debt. Though one of two new UK aircraft carriers HMS Prince of Wales has been leading a NATO training exercise in Norway in recent weeks, the Royal Navy was forced to rely on allied nations for support ships to form what is known as a full carrier strike group.
“We recommend that either a budget uplift or a strictly adhered to prioritisation ranking is introduced,” they said.David Lockwood, chief executive of UK defence contractor Babcock, last month told journalists the current global market was “very supportive because there’s a real need for military capability”.“They’re not increasing at the demand that militaries have.
“The government is going to have to think about starting to means-test something that is currently universally provided, chop off arms of the welfare state, start charging for things like some NHS services or maybe charging people loans for sixth form education.”
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