Event

The economics of increased defence spending

This event hosted by UK think tank NIESR explores the multi-faceted economic implications of an expanded UK defence budget.

Increased geopolitical tensions and the gradual erosion of traditional security guarantees have placed defence expenditure back at the centre of UK fiscal policy. Whilst the strategic imperatives for the UK and its European allies to take on more of the burden for the cost of their security are widely known, the profound macroeconomic and fiscal consequences require closer scrutiny.

This webinar, timed to coincide with the conclusion of the NATO summit in Ankara, will explore the multi-faceted economic implications of an expanded UK defence budget. Our panel of experts will assess how heightened defence commitments could affect the UK’s broader economic framework, evaluating the effects on inflation and aggregate demand alongside the long-term potential for economic growth.

Key areas of discussion include:

• Macroeconomic Impact and Regional Distribution: What are the near-term effects of expanded procurement on GDP growth and inflation? How will this spending distribute geographically across the UK’s regional economies?
• R&D and Productivity Spillovers: To what extent can increased military research and development act as a catalyst for civilian innovation, and what is the potential scale of these productivity spillovers within the UK economy?
• Financing Strategies and Fiscal Innovation: What are the structural trade-offs between taxation, spending cuts, and debt financing? We will evaluate contemporary financing proposals, including the viability of issuing targeted war bonds
• Sovereign Debt and Capital Markets: How will the financing of defence expansion interact with institutional investment and the gilt market, particularly during a period of political uncertainty and close scrutiny over the UK’s fiscal headroom?

Following some opening remarks from each panel member there will be a wider discussion and an opportunity for questions from the audience.

Speakers

Ethan Ilzetzki – LSE

Paolo Surico – London Business School

Katharine Neiss – PGIM

Ben Zaranko – Economics Editor at The Observer (Chair)