What a 'war tax' means for the global economy

A pro-Ukraine demonstration in front of Nato headquarters. (Image: Getty)

Fri, 26 May 2023

At the end of the cold war, America’s president, George HW Bush, popularised the idea that cutting defence spending would boost the economy. “We can reap a genuine peace dividend this year and then year after year, in the form of permanently reduced defence budgets,” he declared in 1992. The world took note. America itself went from shelling out 6% of its GDP on defence in 1989 to roughly 3% within a decade (see chart 1). Then came the 9/11 attacks and the wars in Afghanistan and Iraq. Now, with Russia’s invasi...

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