#ZEWlive: EU-Budget in the Focus of Panel Discussion

The first #ZEWlive edition of the “EU Budget Talks”, hosted on 28 April 2026, looked into the role of defence spending in the European Union’s next Multiannual Financial Framework (MFF). The discussion centred on how defence spending affects the economy, how it can be sensibly allocated between the EU level and Member States, and where greater European coordination could create real added value. Against the backdrop of the ongoing war in Ukraine and growing geopolitical tensions, the topic is becoming increasingly significant. The discussion featured Professor Zareh Asatryan (ZEW Mannheim), Krastio Preslavsky (DG DEFIS/EU Commission) and Professor Paolo Surico, PhD (London Business School/Centre for Economic Policy Research).

Asatryan opened the webinar with a presentation on the economic foundations of European spending on defence. He focused on the question of when the allocation of public funds to the defence sector, apart from being a security necessity, is a use of public money that also makes economic sense. Asytryan looked in particular at the role of the EU budget in comparison to national defence budgets. He showed where coordination at the European level can enable efficiency gains. For example, greater coordination could help to avoid duplication of structures and exploit economies of scale, but this required a clearly defined institutional framework.

Surico explained the macroeconomic effects of defence spending. Noting that the EU currently invests significantly less in defence than the US, he said that these investments, depending on how they were structured, could have varying impacts on growth, innovation and technological development. An efficient use of funds and integrating them into an economic policy strategy to promote research and development (R&D) were crucial.

Preslavsky stated that, from the EU Commission’s perspective, the EU could create added value particularly through coordination and joint programmes, for instance, in supporting the European defence industry. He underlined that, notwithstanding the advantages of such coordination, European approaches should not aim to replace national defence sovereignty but to complement it in a targeted manner, integrating activities more closely. It was crucial, he said, to further deepen cooperation between Member States, institutions and industry.

During the discussion it became clear that defence spending is likely to play a significantly greater role in the forthcoming MFF. At the same time, it remains to be seen how the balance between national responsibility and European coordination can be achieved in practice.