European Union

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Rapporteur Borja Giménez Larraz (EPP, ES) and Chair of the Housing Committee Irene Tinagli (S&D, IT) will brief media following the vote on Parliament’s recommendations to tackle the crisis.
Special Committee on the Housing Crisis in the European Union

Source : © European Union, 2026 - EP

Rapporteur Borja Giménez Larraz (EPP, ES) and Chair of the Housing Committee Irene Tinagli (S&D, IT) will brief media following the vote on Parliament’s recommendations to tackle the crisis.
Special Committee on the Housing Crisis in the European Union

Source : © European Union, 2026 - EP

Rapporteur Borja Giménez Larraz (EPP, ES) and Chair of the Housing Committee Irene Tinagli (S&D, IT) will brief media following the vote on Parliament’s recommendations to tackle the crisis.
Special Committee on the Housing Crisis in the European Union

Source : © European Union, 2026 - EP

Rapporteur Borja Giménez Larraz (EPP, ES) and Chair of the Housing Committee Irene Tinagli (S&D, IT) will brief media following the vote on Parliament’s recommendations to tackle the crisis.
Special Committee on the Housing Crisis in the European Union

Source : © European Union, 2026 - EP

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Written by Sebastian Clapp.

Member States’ defence budgets

The 23 EU Member States that are also NATO members have long been guided by NATO’s 2 % of GDP defence spending commitment formalised at the 2014 Wales Summit. Allies agreed to ‘move towards’ the 2 % ‘guideline within a decade’, but in 2021 only seven of the 21 Member States that were then NATO members spent 2 % of GDP on defence. EU Member States participating in permanent structured cooperation (PESCO – all except Malta) also agreed to ‘regularly increase defence budgets in real terms’ under their PESCO commitments.

While defence budgets have increased in real terms since 2018/2019 (previously they had not even reached pre-2008 financial crisis levels), this follows years of chronic under-investment in defence in most Member States. In 2021, their combined defence budgets stood at €218 billion. Meanwhile, strategic rivals such as Russia and China increased their defence budgets by 300 % and 600 % respectively over the last decade, compared to a collective 20 % increase in EU countries (to 2022). The European Commission notes that, if all Member States had spent 2 % of GDP on defence from 2006 to 2020, this would have amounted to an extra €1.1 trillion for defence spending.

Defence budget definition

The EU uses the Classification of Functions of Government (COFOG) definition of defence spending, which includes ‘Military defence; civil defence; foreign military aid, R&D related to defence; defence not elsewhere classified’. NATO’s definition of defence spending is broader, as it includes military pensions, military healthcare (COFOG includes salaries but not healthcare) and, in some cases, spending on forces such as police or coast guards, but excludes civil defence, which COFOG includes. Moreover, discrepancies may arise from the timing of expenditure recording, particularly for military equipment, since NATO reporting does not adhere to national accounts rules on when such expenditure is recorded. Significant differences exist at national level: e.g. Spain wants to include investment in cyber security, counterterrorism and curbing climate change in its definition.

Russia’s war on Ukraine was a wake-up call for the EU. At the March 2022 Versailles Summit, EU leaders agreed to spend ‘more and better’ on defence. The Strategic Compass, a concrete plan of action for EU security and defence to 2030, reaffirmed this. The second von der Leyen Commission (2024-2029) has made defence a key EU priority. The first-ever Commissioner for Defence and Space was appointed and the European Parliament’s Subcommittee on Security and Defence was elevated to a full standing committee. The Commission also pledged to advance the European Defence Union, launched significant initiatives to boost the European defence industry (such as the first-ever European defence industrial strategy, EDIS), and a European defence industry programme (EDIP). The EU also legislated to boost ammunition production and incentivise joint procurement of urgent defence equipment. On 4 March 2025, Commission President Ursula von der Leyen presented the ReArm Europe plan/ Readiness 2030. This aims to leverage €800 billion in defence spending to 2029, including a €150 billion EU-backed loan through the Security Action for Europe (SAFE) instrument and measures to encourage national defence spending by activating the National Escape Clause of the Stability and Growth Pact for an additional 1.5 % of GDP spending on defence, redeployment of EU cohesion funds, European Investment Bank support and private capital mobilisation. On 19 March 2025, the Commission presented its white paper for European defence, outlining a strategic plan to close critical capability gaps, strengthen the defence industry and readiness, support Ukraine, and boost innovation and partnerships to ensure the continent’s long-term security. On 16 October 2025, the Commission and High Representative put forward the European defence readiness roadmap, which sets out clear objectives and milestones to achieve defence readiness by 2030. At the NATO Summit held in The Hague, NATO Allies endorsed a revised defence spending commitment, setting a target of allocating 5 % of GDP to defence by 2035 (3.5 % for core defence expenditure and 1.5 % for broader defence-related expenditure). All Allies, except Spain, have pledged to meet the 5 % defence spending benchmark by 2035. According to the EDA, meeting the 3.5 % of GDP would oblige many Member States to significantly increase spending, amounting to roughly €254 billion and lifting aggregate defence spending to about €635 billion in 2025 and€807 billion in 2035. This does not take into account that 3.5 % does not apply to non-NATO EU Member States. However, a clear distinction exists between political commitments and concrete budgetary planning (see Annex).

Defence spending increases

In 2022, collective annual EU defence budgets had already increased to €240 billion. In 2023, Member States reached a combined €279 billion (1.6 % of GDP) and €343 billion in 2024 (1.9 % of GDP). In 2025, Member States reached an estimated €381 billion (2.1 % of GDP). All EU NATO Allies now spend more than the 2 % defence expenditure benchmark agreed at the 2014 NATO Summit. The four non-NATO EU Member States (Ireland, Malta, Austria and Cyprus) do not. EU defence investment reached €106 billion in 2024 and was set to approach €130 billion in 2025.

Figure 1 – EU Member State defence expenditure, 2025, in % of GDP

Data Source: NATO and IISS, 2025.

However, there are significant regional differences in the EU. Germany’s defence spending rose by 23 % in real terms in 2024 and 18 % in 2025, bringing the 2025 budget to €95 billion, double its 2021 level. Spending increased from 1.27 % of GDP in 2021 to 2.14 % in 2025. Following reform of the constitutional debt brake, Berlin has committed to further increases, with funding projected to reach €117.2 billion in 2026 and €162 billion by 2029, equivalent to 3.2 % of GDP, or 3.5 % when broader defence-related items are included. Northern Europe has also recorded sustained growth. Sweden has enacted major uplifts under its Total Defence 2025 to 2030 framework, prioritising air defence, long range weapons, naval assets and research. Denmark established a DKK50 billion acceleration fund, raising spending to 2.65 % of GDP. Finland has maintained levels above 2 % of GDP and plans to reach 3 % by 2029. The Netherlands has more than doubled its defence budget since 2021, reaching €25.8 billion in 2025, around 2.2 % of GDP. In fiscally constrained states, growth is more calibrated. France increased its 2026 defence allocation to €68.5 billion, or 2.25 % of GDP, despite wider deficit pressures. Spain and Italy have also raised spending to 2 %, though in part by reclassifying security expenditures. Poland and the Baltic States top the ranking in relative terms: Poland records 4.48 %, Lithuania 4.00 %, Latvia 3.73 % and Estonia 3.38 %. According to NATO projections, all EU NATO members reached at least 2 % of GDP on defence spending in 2025 (see Figure 1). By comparison, US defence expenditure (NATO definition) has consistently stayed over 3 %; it was US$935 billion (3.19 % of GDP) in 2024 (≈€868 billion) and an estimated US$980 billion (≈3.2 % of GDP) in 2025 (≈€910 billion).

In aggregate terms, EU defence expenditure exceeds the declared budgets of Russia and China respectively, although both figures warrant caution given limited transparency. Despite lower headline spending, Moscow and Beijing are likely to generate higher cost effectiveness due to lower domestic price levels, integrated planning structures and reduced organisational overhead. Measured in purchasing power parity, Russia’s defence expenditure in 2024 is estimated at €234 billion, around twice the level indicated by market exchange rates, with a similar distortion likely in China. Over the past two decades, defence spending in Russia and China has more than doubled in real terms; Member States’ expenditure has risen by just over 50 % since 2008.

European Parliament position

Parliament has consistently called for an increase in defence spending. In its annual report on the implementation of the common security and defence policy 2025, MEPs welcome rising national defence spending but urge deeper European cooperation to prevent market fragmentation. They warn of persistent deterrence gaps and call for doctrinal adaptation, expanded industrial output and greater interoperability.

Read the complete At a glace note on ‘EU Member States’ defence budgets‘ in the Think Tank pages of the European Parliament.

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