European security is not measured in billions, but in the quality of investment

(Il Sole 24 Ore Radiocor) - The first serious discussion on the European Union’s forthcoming 2028–34 budget failed to produce any concrete results, but it undoubtedly served to bring back to the fore the dilemma of what security means today, in an age when it even extends to attacks on supermarket fridges. And, consequently, how much it is worth investing in it. The European Council meeting on 15–16 October saw heads of state and government divided, with the mandate to continue mediation entrusted to the President of the European Council, Antonio Costa. In addition to the issue of whether cohesion policy should be managed at regional level or not, there is also the question of resources, with the Irish Presidency calling for cuts of around 141 billion euros compared with the initial ambitions. Whilst the aim is to reach a vote on an agreement by the end of December, the stumbling block is which priorities to fund. And defence is also among the areas facing spending cuts, albeit in a context where security and defence are taking on new significance.

In the Commission’s proposal, presented in July 2025 and amounting to almost 2,000 billion euros, security and competitiveness go hand in hand. The direction set out was clear: security and industrial capacity must now form part of the same agenda. Throughout this debate, ‘the starting point is a fragility that has built up over time’, explains Carlo Altomonte, director of SHIELD, the SDA Bocconi School of Management’s centre for strategic research and training, dedicated to national security, inter-institutional leadership and systemic resilience. The hub, inaugurated in early 2026 at the height of the debate, stems from the synergy between academia, institutions and industry, and is at the very heart of the matter.

“Since the end of the Cold War, European spending cuts have focused in particular on equipment and industrial capabilities,” says Altomonte. The recent upturn in spending, however, remains uneven: between 2021 and 2024, average military spending stood at 1.5 per cent of GDP in Germany, 1.63 per cent in Italia, 1.99 per cent in France and 2.96 per cent in Poland. In 2024, Warsaw reached 4.15 per cent. These figures show an increase, but they do not yet indicate whether this spending is reducing fragmentation or strengthening a European industrial base.”

That is why, as the negotiations orchestrated by Antonio Costa get into full swing, the crucial question is not just how much to spend, but how to spend it. ‘A euro spent on an urgent, one-off purchase made outside the EU may fill an immediate gap, but it has little lasting impact on the European economy,’ according to SHELD’s analysis. “If, on the other hand, it funds research, production and shared supply chains, it can help build technological capabilities, create wider markets and reduce strategic dependencies. The multiplier effect of defence spending depends above all on this composition, and on the way in which the funds are coordinated.”

A first indication concerns the composition: more research and development, dual-use technologies and production capacity, and less spending limited to replenishing national stocks. “Research can boost productivity and generate spillover effects even in civilian sectors, but its effects take time and require coordinated investment,” adds Carlo Altomonte. In this regard, the European Central Bank estimates a multiplier for the euro area of around 0.93 cents of GDP for every euro spent, but this estimate varies greatly by type of expenditure and by country, depending on its composition. It could exceed one in the long term, provided that the investments bear fruit and the other conditions indicated are met.”