This is the latest warning from Bloomberg economists, in the context of President Donald Trump's administration announcing that it will cut military spending on Europe if the allies do not increase their contribution to NATO.
At a meeting with NATO Defense Ministers in Brussels ( Belgian) on February 13, US Defense Minister Pete Hegseth emphasized that Europe must shoulder the majority of military and non-military aid to Ukraine. At the same time, he said that Washington will no longer focus on European security, but will instead focus on the borders of the United States itself.
Trump has previously warned of cutting NATO spending unless European countries increase their defense contribution from 2% to 5% of GDP. However, NATO countries in the EU consider the 5% rate unrealistic and are only aiming for 3.5% of GDP - a figure that still leaves them spending at least $2,700 billion over the next 10 years.
According to Bloomberg, Europe is expected to spend huge sums if the US withdraws, including: $175 billion to rebuild the Ukrainian army; $30 billion to maintain 40,000 peacekeeping troops, in the event of a ceasefire with Russia including this force; $230 billion to restore infrastructure and houses destroyed by war; $2,700 billion to upgrade the military of EU countries, including weapons depots, air defense systems, reinforcing eastern borders and developing defense industry.
Mobilizing this huge amount of money would force the EU to restructure its budget, possibly even issuing a common debt, something many member states opposed. If this happens, the EU's health, education and social welfare sectors will be severely affected, according to Bloomberg.
The question is whether Europe will accept the sacrifice of social security to continue the war in Ukraine, or will it seek to make compromises with Russia? One thing is for sure, if Mr Trump fulfills his pledge, the EU will face the toughest budget problem in decades.
