A report by the German Institute for Employment Research (IAB) suggests that increasing Germany’s defence spending from 2% to 3% of GDP could create up to 200,000 jobs.
Such an increase in the defence budget could boost economic growth by 1%, creating new jobs in the military, construction, and metal production sectors.
IAB researcher Enzo Weber stated that expanding government contracts should be used as an opportunity to promote technology and innovation, aiming to give the declining industrial sector the greatest possible boost.
Higher defence spending will undoubtedly pose a considerable burden on the German economy, but researchers believe it will be manageable if funded through additional borrowing.
Funding the defence budget increase through higher taxes or cuts to healthcare and education budgets would limit the positive effects on employment.
Germany heads to the polls on Sunday, with defence budget increases being one of the key issues, alongside migration.
Last year, Berlin met NATO guidelines for the first time by spending 2% of its GDP on defence, US President Donald Trump has suggested that this standard should be 5%.
