Europe’s commitment to raise core defence spending creates a lasting fiscal challenge, especially for high-debt countries. This brief studies how different ways of financing a permanent increase in public spending affect output, private consumption and inequality. In a calibration exercise on French data, the main finding is that the financing mix matters as much as the spending increase itself. Broad-based labour taxation is costly because it discourages work and erodes the tax base. Capital taxation depresses investment. Consumption taxation is less distortionary but does not strongly reduce inequality. […]