Hasan Tutar

Faculty of Economics and Administrative Sciences, Istanbul Beykent University, Istanbul, Türkiye;

Research Methods Application Center, 

Azerbaijan State University of Economics (UNEC),

Baku, Azerbaijan 

hasantutar@beykent.edu.tr

ORCID 0000-0001-8383-1464

Who pays for rearmament? Budget re-compositing and fiscal expansion in the European Union

Musa Gün

Faculty of Economics and Administrative Sciences, 

Recep Tayyip Erdoğan University, 

Rize 53100, Türkiye

musa.gun@erdogan.edu.tr

ORCID 0000-0002-5020-9342

Jana Firstová

Faculty of Security Studies, Pan-European University, 

Prague, Czechia

jana.firstova@peuni.cz

ORCID 0000-0003-4527-864X

Anita Tang

Doctoral School of Management and Business Administration,

John von Neumann University, 

Hungary

tangl.anita@nje.hu

ORCID 0000-0003-0418-5439

Abstract. Russia’s full-scale invasion of Ukraine altered European security priorities, but a higher defense share does not by itself establish cuts elsewhere. This study ex-amines all ten functions of government in the EU-27 using Eurostat data for 2005–2024. Exact budget shares are paired with percentage-of-GDP outcomes, a post-2022 geographic-exposure design, country and year fixed effects, few-treated-cluster inference, false-discovery-rate control, and equivalence tests. Across the full panel, a one-percentage-point higher defense share is most strongly associated with a 0.871-point lower economic-affairs share; smaller as-sociations for environmental protection, housing, and recreation are statistically detectable but fall within a ±0.25-point equivalence bound. Health, education, and public order associations are equally small, whereas social protection re-mains inconclusive. After 2022, the eight more-exposed countries do not show a statistically robust differential increase in the defense budget share (0.362 points; wild-bootstrap p = .267). They do, however, expand total expenditure by 3.034 percentage points of GDP (p < .001). The early rearmament episode, therefore, reflects fiscal expansion more clearly than broad program displacement.

Received: November, 2025

1st Revision: June, 2026

Accepted: August, 2026

DOI: 10.14254/2071-8330.2026/19-3/10

JEL Classification: H50, H56, E62, F52

Keywords: European Union, defence spending, budget composition, fiscal expansion, government expenditure