Additional spending on defence could create up to 200,000 jobs in Germany, a study found on Monday.
The report, led by the Institute for Employment Research (IAB), found that raising expenditure on the German military, or Bundeswehr, from 2% to 3% of gross domestic product (GDP) would give the struggling German economy a significant boost.
IAB researcher Enzo Weber said the measure could lift economic growth by 1% and create thousands of new jobs in the Bundeswehr, in construction and in metal production.
Germany’s defence industry could receive much-needed impetus through reliable planning for investments and the recruitment of skilled workers.
“If government procurement is expanded, this must be used as an opportunity to promote technology and innovation,” said Weber. “The aim is to give the industry’s ailing economic strength the greatest possible boost.”
While higher expenditure on defence would be a considerable burden for the German economy, it would ultimately be bearable if the spending is financed through additional borrowing, Weber argued.
According to the report, financing extra spending on the German military by raising taxes, or through cuts to health and education budgets, would limit the positive effect on employment.
Raising defence spending is a key political issue in Germany ahead of national elections on Sunday.
The country hit the NATO guideline of spending 2% of GDP on the military last year, but further expenditure could be a challenge for the next government amid demands from US President Donald Trump for European countries to lift spending to 5% of GDP.
