November 19, 2025
Higher defense spending is expected to have little effect on the economic growth of the Netherlands. The so-called multiplier – the increase in GDP per additional euro spent by the government – is likely close to zero. This is mainly because the labor market is tight and a large part of the defense equipment is imported. Depending on how the additional spending is financed, the total effect may even be negative.
The analysis by the Central Planning Bureau (CPB) is based on findings from scientific literature and a translation to the Dutch situation. Factors determining the size of the multiplier were examined, such as import dependence, labor market tightness, and the supply of defense equipment. A multiplier of zero means that additional defense spending does not stimulate the economy. However, economic effects should not be the leading factor in decisions about defense spending. The goal of increased spending is to strengthen the safety and resilience of the Netherlands – an essential condition for a well-functioning economy.
