The UK defence minister's shock resignation is a warning for all of Europe
John Healey is right about the risk of wars. But it has become politically treacherous for Nato leaders to borrow for defence
TL;DR
- Key Western European governments, including the UK, France, and Italy, are hesitant to significantly increase defense spending due to concerns about their national debt and the bond markets.
- The resignation of UK Defence Secretary John Healey underscores the political difficulty of securing resources for defense amid rising threats from Russia.
- Russia is actively engaged in covert warfare and has shifted to a war economy, significantly increasing its military spending.
- A proposed solution is joint borrowing for defense among willing European NATO allies, creating a euro-denominated safe asset, similar to past collective borrowing for economic support.
- While the EU has allowed member states extra leeway to borrow for military expenditure, many are not fully utilizing this opportunity.
- Some NATO countries, like Germany, Poland, and the Baltic states, are increasing military expenditure due to lower debt ratios, aiming to meet NATO's 5% of GDP defense spending target by 2035.
- The UK, France, and Italy are projected to fall short of their defense spending targets by the end of the decade, with the UK's plan facing delays and internal cabinet disputes.
- The UK's higher borrowing costs compared to some Eurozone countries are partly attributed to past economic instability, such as Liz Truss's mini-budget.