Foresight No. 2: The Price of Rearmament (full note, PDF)

Foresight, prospective note No. 2. Driss EFFINA, PhD. October 2026. PDF, 25 pages, 14 charts and diagrams, 7 tables.

At The Hague in June 2025, NATO allies committed to spend 5 percent of GDP a year by 2035: at least 3.5 percent on core defence and up to 1.5 percent on resilience. Sixteen months later, with Brent at 127 dollars a barrel and long-term yields at multi-decade highs, the question is whether the target is affordable. This note answers it for the United States, the United Kingdom, France, Germany and Canada with five original tools built from SIPRI, NATO and IMF October 2026 data: a year-by-year defence gap; a debt model with multipliers, import leakage and a risk premium; a fiscal capacity to rearm index; a measure of the peace dividend since 1990; and a capacity model of defence inflation.

Inside the full note:

• The commitment and where each country stands
• The Cold War benchmark and the peace dividend
• The defence gap
• How defence spending reaches the economy
• Fiscal capacity to rearm
• Financing choices
• The debt bill to 2035
• Industrial bottlenecks, defence inflation and leakage
• Scenarios to 2035
• The triple squeeze: defence, ageing, climate and interest
• A dashboard of leading indicators
• Implications for policy and for investors
• What to watch

Read the free preview: The Price of Rearmament.