Phoenix 24
Europe rearms unevenly as eastern nations confront greater security pressure.
WARSAW, POLAND — June 2026. Poland devoted a larger share of its economy to defense than the United States in 2025, placing the country at the forefront of Europe’s accelerating military expansion. NATO estimates show that Warsaw allocated 4.48% of its gross domestic product to defense, compared with 3.22% in the United States. The figures illustrate how proximity to Russia and the war in Ukraine have transformed security priorities across the alliance’s eastern flank.
European NATO members increased defense expenditure by 14% during 2025, bringing their combined spending to approximately €739 billion. It was the largest annual increase recorded since the 1950s and pushed military budgets to their highest level since the Cold War. For the first time, every European Union country belonging to NATO reached the alliance’s former minimum target of spending 2% of GDP on defense.
The overall increase conceals substantial differences between countries. EU members of NATO collectively allocated about 2.5% of their GDP to defense, an increase of 0.4 percentage points in a single year. However, Poland, the Baltic states and several Nordic countries moved well beyond the minimum requirement, while many larger economies stopped almost exactly at 2%.
Poland led the alliance with its 4.48% commitment, more than twice the former NATO benchmark. Lithuania followed with 4%, while Latvia spent 3.73% and Estonia 3.38%. The concentration of the highest figures along NATO’s eastern border reflects the security calculations of governments that regard Russia as a direct and enduring military threat.
These countries have invested heavily in troops, ammunition, air defenses and modern weapons systems since Russia expanded its invasion of Ukraine. Their governments argue that deterrence requires operational capabilities rather than political declarations alone. Poland has also pursued large procurement programs involving tanks, artillery, aircraft and missile-defense systems as it attempts to build one of Europe’s strongest conventional armed forces.
The Nordic countries form another group increasing their military commitments. Denmark allocated 3.22% of GDP to defense, matching the proportion spent by the United States, while Finland reached 2.77% and Sweden 2.51%. Finland and Sweden joined NATO after abandoning decades of military nonalignment, a strategic transformation driven by the deterioration of Europe’s security environment.
Greece remained another major spender, allocating 2.85% of its economy to defense. Its military expenditure is influenced not only by Russia but also by its longstanding strategic rivalry with Turkey. Oxford Economics expects Poland, the Baltic states and Nordic countries to continue leading Europe’s rearmament and considers several of them to be on a credible path toward spending 5% of GDP by 2035.
At the opposite end of the ranking, numerous European countries reached the former NATO target without moving significantly beyond it. Italy spent 2.01% of GDP and France 2.05%, while Spain, Belgium, Portugal, Czechia and Luxembourg reported exactly 2%. Slovenia, Croatia, Slovakia, Bulgaria and Hungary remained within a narrow range of between 2.02% and 2.06%.
Defense spending as a percentage of GDP declined in Hungary and Czechia during 2025 despite the wider European increase. Oxford Economics expects the European Union’s average to rise by only 0.1 percentage points in 2026, reaching approximately 2.6%. That forecast suggests that the rapid acceleration observed last year could give way to a period of slower progress.
The new NATO objective adopted at The Hague creates a much more demanding financial challenge. Alliance members agreed on a target equivalent to 5% of GDP by 2035, with 3.5% dedicated to core military requirements and another 1.5% assigned to defense-related infrastructure and resilience. Measured against the 3.5% military benchmark, most European governments remain substantially below the required level.
Apart from Poland, Lithuania and Latvia, nearly every European country would need to increase essential defense spending considerably. Major economies could require increases of between one and 1.5 percentage points of GDP. Italy, Spain, Belgium, Portugal, Czechia and Luxembourg would each need to add approximately 1.5 percentage points to meet the core target.
Higher budgets do not automatically produce equivalent increases in military capability. NATO spending figures are self-reported and calculated on a cash basis, meaning advance payments for multiyear contracts can increase annual totals long before weapons or equipment are delivered. The broader 1.5% category for defense-related infrastructure could also allow governments to classify some civilian projects as security expenditure.
Equipment purchases represent the strongest component of the recent increase. Military hardware accounted for approximately 0.5 percentage points of the 0.9-point rise in defense expenditure relative to GDP since 2021. Equipment now represents about one-third of total spending, compared with roughly one-quarter five years earlier.
European industry does not receive all the economic benefits from the rearmament drive. Oxford Economics estimates that around 40% of EU spending on defense equipment goes to suppliers outside the bloc. This means that approximately two of every five euros used to purchase military systems ultimately support foreign manufacturers rather than European factories.
The dependence is especially significant in capabilities Europe cannot yet produce at sufficient scale. These include long-range weapons, advanced air-defense systems, early-warning and detection technology, tactical transport, fifth-generation stealth aircraft and large military drones. European manufacturers also rely on imported microchips and face growing competition in artificial intelligence systems designed for battlefield use.
The defense expansion has become one of the few positive sources of economic growth in a Europe affected by repeated external shocks. Germany’s fiscal stimulus and rising military orders could generate demand across several EU economies, particularly in engineering, manufacturing and technology. However, limited industrial capacity and persistent technological gaps mean that higher spending will not immediately create strategic autonomy.
Europe is therefore rearming at an unprecedented pace but not as a unified bloc. Poland and the countries closest to Russia are treating defense as an urgent national priority, while many western and southern governments remain near the minimum commitment. The central challenge is no longer simply increasing budgets, but converting expenditure into deployable capability, stronger industry and reduced dependence on foreign suppliers.
At Phoenix24, security commitments are measured by capabilities, not percentages.