Debunking Europe's Welfare vs. Defense Spending Myth

Can Europe Afford Welfare and Defense?

Mar 28, 2025

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💣 Europe is rearming faster than at any time since the Cold War. 💶 Welfare budgets are on the line. 🧠 Old fears are creeping back.

You were promised peace and protection. Now your taxes may fund tanks instead of teachers.

Experts say welfare must shrink. But the numbers tell a different story.

Is Europe weaker, smarter or just lost?

📊 Europe can afford both missiles and maternity care. 💥 The real threat isn’t the war. It’s the myth that we can’t protect our people and our values at the same time.

This post looks at a hug collection of data—and shows how you can navigate this shift without falling for fear.

Ever wonder how your funding proposal really gets evaluated?

In this LinkedIn post, I broke down the EU scoring logic — section by section — and shared where most teams lose points without realizing it. ➡️ Read the full breakdown here

1. Will Europe's Rising Defense Expenses Kill Its Welfare State?

Russia's invasion changed Europe's defense budgets. So,the old myth about defense spending destroying welfare is back—let's analyse it.

Europe is stepping up defense spending at a rate unseen in decades. Russia's aggression against Ukraine in 2022 forced European governments to rapidly boost their military budgets.

As countries like Poland, Lithuania, and the Baltics double down on defense, many voices are reviving an old fear: Europe's cherished welfare state is in danger.

But is it really?

This longstanding myth claims that Europe only has strong welfare because it spends less on defense compared to the U.S.

It's a tempting narrative, easy to repeat—but do the facts support it?

2. Does Europe need to choose between tanks and hospitals?

The belief that more missiles mean fewer maternity wards is seductive—but false.

Yes, European countries are boosting defense budgets.
Yes, the U.S. spends more on the military.

But even after increasing defense spending, Europe will still spend more on welfare than the U.S.

The real story?
Europe can strengthen both its security and its social safety net.

In fact, it must.

In a world of rising geopolitical risk and domestic inequality, choosing between defense and welfare is not strategy—it’s surrender.

3. Evidence & Supporting Facts

3.1 What counts as "welfare" and "defense" spending?

Welfare spending includes public expenses on pensions, healthcare, unemployment benefits, education, housing, family support, and disability programs. These programs ensure basic security and well-being across the life cycle.

Defense spending covers military operations, equipment, personnel, and strategic investments made by national governments to ensure security and deterrence.

3.2 Europe spends more on welfare than the U.S.—even after raising defense budgets.

Europe's average welfare spending stands around 25% of GDP, while the U.S. spends about 22.5% (OECD, 2023).

Europe’s defense spending averages 1.65% of GDP, compared to the U.S. at 3.5% (SIPRI, 2023).

Even if Europe reallocates 2 percentage points from welfare to defense, its welfare effort would still outpace America’s.

3.3 Some countries prove this balance is possible.

France spends 25% of GDP on welfare and 1.89% on defense (Eurostat, 2024).

Poland plans to reach 4% GDP in defense, yet maintains pension, health and education budgets above 20% GDP (NATO, 2023).

Sweden maintains one of the world's most comprehensive welfare systems, spending over 25% of GDP on social protection. At the same time, it is raising defense spending to meet and exceed the 2% of GDP NATO target (OECD, 2023).

Greece spends 30,7% on welfare and 3,54% on defense (above the US).

By contrast, the U.S. collects just 27.6% of GDP in taxes, which limits its welfare ambition (OECD, 2023).

Canada spends 21.1% of GDP on welfare, and Mexico just 10.9%, both under the US and Europe’s average (OECD, 2023).

3.4 Europe funds its welfare through taxes. The U.S. funds its military through debt.

This isn’t just a fiscal choice—it’s a political one.

In the U.S., defense often appears to be used as an excuse to avoid investing in social protection. Nevertheless, the data shows the US does not invest so little in welfare. 22.5% of GDP is well above most parts of the world.

And because the dollar dominates global finance, America can borrow more easily to fund guns without cutting butter.

But Europe doesn’t need that excuse. It already proves that funding both is possible.

Europe taxes more, spends more, and protects more—without sacrificing its long-term balance, which means future Europeans will have a lighter burden than future Americans.

Build by the author from data that you can find in this download

I’ve collected a hug amount of data for this post. There’s no way I’m going to publish all those ugly tables in here. If you have an interest for it, just download this PDF with the data and the links to the sources.

4. The Dollar, the Deficit, and the Tax Gap

Critics say Europe can’t afford both welfare and defense. They say more tanks mean fewer teachers. More security means less social safety.

But the data tells a different story—and so does the tax code.

The real divide isn't just about spending—it's about how countries fund it.

The United States collects only 27.6% of GDP in taxes. Europe collects around 40% (OECD, 2023a).

That gap explains a lot. Europe funds its services. The U.S. borrows for them.

Because the U.S. dollar is the world’s reserve currency, America can run larger deficits without facing the same pressure as others (IMF, 2022).

This privilege allows Washington to spend 3.5% of GDP on defense and still maintain a broad welfare system—without matching Europe’s tax effort (SIPRI, 2023).

But there's a cost. The U.S. model defers effort. It pushes today’s bills onto future generations.

Europe chooses a different path. It funds what it spends—through taxation, not wishful debt.

That’s not austerity. It’s accountability.

Europe may not have the dollar’s global power. But it has something else: fiscal credibility.

In the end, both alternative models have pros and cons.

5. Europe Can Fund Both

The numbers are clear: Europe doesn’t have to choose between safety and solidarity.

It already funds both. And it does so more sustainably than the U.S.

While America leans on the dollar and ballooning deficits, Europe collects what it needs, spends what it collects, and protects its people.

The average European government spends 25% of GDP on welfare and 1.65% on defense (OECD, 2023a), (SIPRI, 2023).

Even increasing defense to U.S. levels—3.5% of GDP—at the cost of cutting welfare expenses, would still leave Europe with one of the most generous welfare states on Earth (NATO, 2023).

It does seem, however, that Europe is choosing to fund these increased defense expenses with debt. That is future europeans will pay for it. Something we may discuss in the comments.