What Does the $19 Trillion Global Cost of Conflict Look Like?

The economic impact of violence reached a staggering $19.1 trillion in 2024, marking an increase of $717 billion from the previous year. This surge is attributed to a rise in conflict deaths, which have hit 25-year highs, and ongoing wars in Ukraine and Gaza. In light of these global tensions, many nations, particularly in Europe, have significantly increased their defence spending, reflecting a broader trend towards militarisation.

Last updated: 26 October 2023 (BST)

What’s happening now

The landscape of global conflict and its economic implications is shifting dramatically. As military spending escalates in response to heightened geopolitical tensions, countries worldwide are reassessing their security strategies. The conflict in Ukraine continues to be a focal point of concern, while the recent escalation in Gaza has further strained international relations. In 2024, military expenditure alone has soared by $540 billion, reaching a total of $9 trillion, signalling a significant shift in how nations are prioritising defence and security.

Key takeaways

The economic cost of violence surged to $19.1 trillion, a 3.9% increase from the previous year.
Military spending reached $9 trillion in 2024, with 84 countries increasing their military budgets.
Internal security expenditure totalled $5.7 trillion, reflecting rising costs for policing and judicial systems.
GDP losses due to conflict rose by 44% in 2024, totalling £462 billion.
Globally, 122 million people are forcibly displaced, with the economic impact of displacement at £343 billion.

Timeline: how we got here

The trajectory of conflict and its economic ramifications has evolved significantly over the last few decades. Key milestones include:

2008: Economic impact of violence begins to escalate, with conflict costs notably rising.
2022: The onset of the Ukraine conflict marks a pivotal moment, increasing military spending across Europe.
2023: Global economic costs of violence reach £18.4 trillion.
2024: Current figures show a dramatic rise to £19.1 trillion, as conflicts intensify.

What’s new vs what’s known

New today/this week

The recent analysis from the Institute for Economic and Peace highlights the dramatic increase in military spending and the broader economic implications of ongoing conflicts. This includes the notable uptick in internal security costs and the staggering number of displaced individuals worldwide.

What was already established

Prior reports have documented the rising costs associated with violence and conflict, but the current figures demonstrate a clear escalation in both military and internal security expenditures, alongside significantly increased GDP losses. This trend has been exacerbated by ongoing conflicts and geopolitical tensions.

Impact for the UK

Consumers and households

The rising costs associated with global conflict impact UK consumers indirectly through increased taxes and reduced public spending. As military and security budgets rise, there may be less funding available for social services, healthcare, and infrastructure. Additionally, inflationary pressures may arise from increased government spending on defence.

Businesses and jobs

UK businesses are facing heightened uncertainty due to global instability. Supply chains may be disrupted, particularly in sectors reliant on imports from conflict zones. This could lead to increased costs for businesses, potentially resulting in job losses or hiring freezes as companies adapt to the new economic landscape.

Policy and regulation

The UK government may respond to these developments by reassessing its defence policies and spending priorities. Upcoming consultations and reviews of military readiness may lead to shifts in budget allocations, focusing more on national security and less on domestic welfare initiatives.

Numbers that matter

£19.1 trillion: Total economic impact of violence globally in 2024.
£9 trillion: Total military spending in 2024, up £540 billion from 2023.
£5.7 trillion: Internal security expenditure costs worldwide.
£462 billion: GDP losses caused by conflict, representing a 44% increase from the previous year.
122 million: Number of forcibly displaced individuals globally, more than doubling since 2008.
£343 billion: Economic toll of refugee and internally displaced persons (IDPs) costs.

Definitions and jargon buster

GDP: Gross Domestic Product, representing the total value of goods produced and services provided in a country during a specific period.
IDPs: Internally Displaced Persons, individuals who have been forced to flee their homes but remain within their country's borders.
Military spending: Expenditure by a government on its armed forces and defence capabilities.
Internal security expenditure: Costs associated with maintaining law and order, including policing and judicial systems.

How to think about the next steps

Near term (0–4 weeks)

In the immediate future, watch for fluctuations in military announcements from European nations as they reassess their defence strategies in response to ongoing conflicts. The UK may also engage in discussions regarding its own military budget and security policies.

Medium term (1–6 months)

Over the next few months, further developments in global conflicts, particularly in Ukraine and Gaza, could prompt additional military spending and shifts in foreign policy. Economic forecasts may also reflect the ongoing impact of these conflicts on global markets.

Signals to watch

Changes in government defence budgets and military spending announcements.
Reports on the displacement of populations and its economic impact.
Updates on international negotiations aimed at conflict resolution.

Practical guidance

Do

Stay informed about global conflicts and their economic implications.
Consider potential impacts on your local economy and public services.
Engage with community discussions on how to support displaced individuals and families.

Don’t

Ignore the potential long-term economic effects of rising military spending.
Assume that increased defence budgets will not impact domestic welfare programs.
Overlook the importance of international cooperation in conflict resolution.

Checklist

Monitor news on military spending and conflict developments.
Assess how these changes could affect your financial planning.
Stay aware of community initiatives supporting refugees and IDPs.
Engage with local representatives about public spending priorities.
Educate yourself on the broader implications of international conflicts.

Risks, caveats, and uncertainties

While the figures presented reflect the current state of global conflict and its economic implications, there are several uncertainties. The situation in both Ukraine and Gaza remains fluid, and any developments could significantly alter these predictions. Additionally, the long-term economic impact of increased military spending is not yet fully understood, and shifts in public opinion may influence government policies going forward.

Bottom line

The dramatic increase in the economic impact of violence signifies a critical juncture for nations worldwide, particularly in Europe and the UK. As countries reassess their defence strategies, the ramifications for public spending, security, and international relations will likely be profound. Stakeholders should remain vigilant and informed about these developments to understand their implications on both a global and local scale.

FAQs

What is the current economic impact of violence globally?

The economic impact of violence reached £19.1 trillion in 2024, representing a significant increase from the previous year due to ongoing conflicts and rising military expenditures.

How much is military spending expected to increase in the near future?

In 2024, military spending is projected to grow by £540 billion, reaching £9 trillion, as countries respond to heightened geopolitical tensions and conflicts.

What are the implications of rising internal security costs?

Rising internal security costs, which hit £5.7 trillion, indicate increased spending on policing and judicial systems, which may lead to reductions in funding for other public services and welfare programs.