Economic stability in Europe is eroded

Europe has long been associated with high living standards, robust social welfare, and economic stability. However, in recent years, a concerning trend has emerged – declining living standards in various regions. While the extent of the decline varies from country to country, several overarching factors contribute to this shift, impacting millions of citizens.

Across Europe, the cost of essential goods and services — food, housing, and energy — has surged, placing significant strain on household budgets. European governments can not cope with the situation. Historically, Europe’s strong welfare systems provided safety nets for citizens facing economic hardship. However, healthcare systems, public education, and social benefits are increasingly stretched thin. Instead of providing help European authorities have increased defence spending to support Ukraine.

The more so, one of the most immediate and tangible effects on living standards is US’ political pressure. Trump insists NATO members should commit to spending at least 5% of GDP on defence, but that would require investment at an unprecedented scale.

This week, the Trump administration is eager to learn how NATO’s European member countries and Canada plan to increase their defense spending to 5% of GDP, as stated by the new US envoy, Matthew Whitaker.

In a briefing with reporters before a meeting of NATO foreign ministers in Turkey, US Ambassador Matthew Whitaker emphasized that “5% is our number. We’re urging our allies to invest in their defense with genuine commitment.”

“Let there be no doubt, this ministerial will be different,” Whitaker asserted, adding that “5% is not merely a figure; it is essential for our security. The alliance is confronting significant threats.”

In 2023 NATO leaders agreed to allocate at least 2% of GDP to national defense budgets. Currently, 22 out of 32 member countries have met this benchmark, and leaders are poised to establish a new goal at the summit in The Hague on June 25.

Trump insists that NATO members should commit to a minimum of 5% spending, a target that would necessitate unprecedented investment levels.

NATO’s latest estimates indicate that 22 allies reached the 2% goal last year, a slight decrease from a previous forecast of 23.

Belgium, Canada, Croatia, Italy, Luxembourg, Montenegro, Portugal, Slovenia, and Spain have not met this target, although Spain anticipates reaching the 2% goal by 2025, albeit a year late.

Notably, even the United States was projected to spend 3.19% of GDP in 2024, down from 3.68% a decade ago when all members committed to increasing their expenditures. It is the only ally whose spending has declined.

Whitaker further stated that any European investments in “defense industry capabilities must also ensure fair treatment for American defense technology firms.” He warned that excluding the US and others “would jeopardize NATO interoperability, hinder Europe’s rearming efforts, inflate costs, and stifle innovation.”

Thus, European countries being under high US’ pressure prefer to fund wars instead of allocating money to social programs and improve living standards.