Infrastructure projects for 1.5% NATO target could create millions of jobs in Europe EY, DekaBank publishes uplifting study

A new wave of security-related investment by European NATO members in an attempt to fulfill the 1.5% pledge could generate an economic boost of €822 billion annually and create around 4.4 million jobs. 

These projections were made in a new study generated by consulting firm EY and Germany’s DekaBank, as Euractiv reports.

The projections follow a NATO agreement to increase defence-related spending targets, with analysts suggesting that investment in infrastructure linked to security and resilience could provide a broader economic benefit beyond traditional military expenditure.

“These investments in defence-related infrastructure will have significant economic effects and benefit national economies as a whole, since they – even more so than arms investments in the narrower sense – can strongly stimulate the economy,” Jan Friedrich Kallmorgen, a partner at EY-Parthenon, said in a statement released on July 10.

Last year, NATO allies agreed to raise their overall defence spending target to 5% of GDP by 2035 following pressure from the United States. Under the agreement, 3.5% of GDP is intended for core defence capabilities, while the remaining 1.5% is allocated to broader security-related investments.

These additional investments would focus on areas such as military mobility, including strategically important roads, railways and ports, as well as strengthening electricity networks, cyber infrastructure and other critical systems.

The study estimates that European NATO members would need to invest approximately €320 billion each year to meet the 1.5% target. In return, the spending could generate around €822 billion in economic output—a return of €2.51 for every euro invested.

The NATO framework defines the 1.5% spending category as investment intended to “protect our critical infrastructure, defend our networks, ensure our civil preparedness and resilience, unleash innovation, and strengthen our defence industrial base”.

According to the EY and DekaBank analysis, the biggest beneficiaries would likely include construction and logistics companies, telecommunications firms, and the electronics and electrical engineering industries.

The investment programme could support around 4.4 million jobs across Europe, including approximately 1.8 million positions directly linked to infrastructure projects. Suppliers and related industries could see similar employment gains if the new spending is carried out in addition to existing investment plans.

However, the outlet recalls that the expanded spending category has faced criticism from defence experts, who argue that its broad definition creates uncertainty over what projects should qualify.

Unlike traditional military spending, areas such as resilience, preparedness and critical infrastructure protection do not have universally agreed boundaries, raising questions over how governments will measure progress towards the target.

As Euractiv points out, the economic impact of the programme will therefore depend not only on the scale of investment, but also on how NATO members define, coordinate and implement projects under the new security spending framework.

By Nazrin Sadigova