Europe's higher defence expenditure may hit exports

To find more resources to fund higher defence expenditure, Europe may have to raise taxes or cut government spending on welfare and other development activities

At the Munich Security Conference (MSC) last month, just a week before the second anniversary of the Russian invasion of Ukraine on February 24, 2022, the leaders of European countries assured full support to Ukraine in its war against Russia, and resolved to build their own military capabilities instead of solely relying on the United States to defend them under the umbrella of North Atlantic Treaty Organisation (NATO). Last week, they met in Paris to reiterate their determination to support Ukraine, increase their defence spending to at least 2 per cent of their GDP and coordinate their defence procurement policies.