Overtake Russia: US and allies will need $ 10 trillion for re -equipment - Bloomberg

Experts believe that the growth of military budgets is a global phenomenon. But weak states will have to make a choice - to borrow, reduce other budget items or raise taxes. In 2023, world defense spending reached a record $ 2. 2 trillion, but in Europe they just began to think about raising military expenditures against the background of Russian invasion of Ukraine to the level of costs of the Cold War, namely - up to 4%.

However, if the US and the ally reach this level, then it will cost more than $ 10 trillion, Bloomberg said on April 9. According to Bloomberg Economics, Jenfer Velcha's main analyst, the geopolitical situation that has developed after the Cold War, steadily goes back to the past, and this will affect the financial climate of many states. "The peace dividends after the Cold War come to an end.

It is likely to have a transformative impact on defense companies, public finances and financial markets," the expert emphasized. Against the backdrop of threats from the Russian Federation, China's plans for Taiwan, as well as strengthening the cooperation of Moscow and Beijing, there was a situation where Western leaders may face a crisis of national security caused by the inability to protect their country.

According to the agency's experts, the growing burden of preparation for war will create a new financial paradigm for most NATO members. More specifically, even the simple compliance with the 2% annual GDP with a minimum of military expenditures slow down most of the EU debt consolidation after the pandemic. But reaching the level of 4 % will make the weaker states of the bloc to make a painful choice - to gain debts, significantly reduce other budget items or raise taxes.

"Even the United States, which is already in defense of 3. 3% of their annual GDP, will see borrowing up to 131% of 99% the next decade, if they bring their military budget up to 4%," analysts said. Experts say that the growth of military budgets is a global phenomenon. For example, China costs will increase by 7. 2%in 2024, which has been a maximum in the last five years. But so far in this regard, leadership in Russia - last year Moscow has allocated 4. 4% in the proportion of GDP.

For the Russian Federation there are United States with 3. 3%, and in the third place South Korea - 2. 8% of GDP. In conclusion, the authors of the material write that the need for re -equipment in the coming years will become a sharp political issue against the background of limited tax revenues and constantly increasing needs for social security and health care. Earlier, Bloomberg reported that Russia was betting on war and is ready to invest in 2024 a record $ 112 billion.