European Defence Policy: Prospects and Challenges

European defence policy offers opportunities for spending more and better where better achieves more from existing resources. Increased defence spending needs to be justified by the threats to Europe which have to be identified and defined. Higher defence expenditure usually focuses on inputs rather than final outputs in the form of greater peace, protection, security and the safety of a nation’s citizens. The task is to show the opportunities for applying economic analysis to the complexities of European defence policy and collaborative defence projects. Economic efficiency criteria identify the contribution of final outputs, substitution and competition to the formulation of European defence policy, but the final outcomes are likely to be determined by military-political factors rather than economic efficiency criteria. The paper provides a critique of European defence policy.