Europe has decided it wants to defend itself on its own terms after decades of treating military budgets as a line item to quietly trim or ignore.
The turning point was Russia's full-scale invasion of Ukraine in 2022, though the reckoning had been building for years. EU defence spending rose from €218 billion in 2021 to an estimated €381 billion in 2025, according to the European Defence Agency, or a 75% increase in just four years.
Global military spending hit a record $2.9 trillion that year, with Europe as the main driver — up 14% to $864bn (€742bn), according to the Stockholm International Peace Research Institute (SIPRI). Germany, for the first time since 1990, exceeded NATO's 2% of GDP target, reaching 2.3%.
Then came the political machinery to make it permanent. The EU's ReArm Europe Plan, formally Readiness 2030, aims to unlock €800bn in defence investment, with the European Commission raising up to €150bn on capital markets through a new instrument called SAFE, the Security Action for Europe.
The escape clause in the Stability and Growth Pact now allows member states to increase defence spending outside normal fiscal rules. A 1.5% GDP increase in defence budgets, the Commission estimates, could create nearly €650bn in fiscal space over four years.
