In what has been dubbed a historical turning point, NATO ‘Allies’ agreed on June 26 to increase core defence expenditures to 3.5% of GDP and to spend at least another 1.5% on defence-related investments. Members also reaffirmed their “[…] ironclad commitment to collective defence as enshrined in Article 5 of the Washington Treaty – that an attack on one is an attack on all.” We estimate that well-executed strategies could raise euro area GDP by up to 3.4% by 2045, while poorly executed approaches would yield negligible economic returns. Well-designed policies can expand rather than crowd out private investments and, ... (full story)