Geopolitic / North America
Global Defence Spending Trends
Global defence spending growth in 2025 slowed to 2.5% in real terms, a significant decrease from the 7-8% growth observed in the previous two years. This slowdown is attributed to a lower US Defence Budget, influenced by high military aid for Ukraine in prior years. Fiscal difficulties in Russia also contributed to the deceleration in defence spending.
Source material: Defence spending trends | The Military Balance 2026
Summary
Global defence spending growth in 2025 slowed to 2.5% in real terms, a significant decrease from the 7-8% growth observed in the previous two years. This slowdown is attributed to a lower US Defence Budget, influenced by high military aid for Ukraine in prior years. Fiscal difficulties in Russia also contributed to the deceleration in defence spending.
Despite the slowdown in some regions, European defence spending is projected to increase by around 9% in real terms, indicating a structural shift in military investment. Countries like Germany are leading this increase, while even traditionally constrained nations such as the UK and France are also expected to boost their defence budgets.
The outlook for global defence spending from 2022 to 2026 will be shaped by the anticipated increase in the US budget and continued growth in Europe. The overall trend suggests a move away from the previous norm of 1% annual increases, reflecting a more aggressive stance on military readiness.
Perspectives
Proponents of Increased Defence Spending
- Highlights significant growth in European defence spending
- Argues for the necessity of military investments in response to geopolitical tensions
- Proposes that increased US defence budget will strengthen global growth
Critics of Defence Spending Growth
- Warns about the sustainability of military budgets amid fiscal difficulties
- Questions the long-term viability of increased spending in Russia
- Rejects the notion that US budget increases will fully counterbalance global disparities
Neutral / Shared
- Notes the overall slowdown in global defence spending growth
- Observes the impact of military aid on national budgets
Metrics
7-8%
global defence spending growth in the previous two years
This highlights the stark contrast in growth rates over the years.
we had 7-8% real growth in the two years before that
9%
European defence spending increase projection
This reflects a structural shift in defence spending priorities in Europe.
an increase in European Defence spending of around 9% in real terms
Key entities
Key developments
Phase 1
Global defence spending growth in 2025 slowed to 2.5% in real terms, a significant drop from the 7-8% growth seen in the previous two years. European defence spending is projected to increase by around 9% in real terms, driven largely by military investments in Germany.
- Global defence spending growth in 2025 slowed to 2.5% in real terms. This is a significant drop from the 7-8% growth seen in the previous two years
- The decrease in growth is attributed to a lower US defence budget. High military aid for Ukraine in 2024 skewed overall trends
- In contrast, the US budget is expected to increase significantly next year. This will likely strengthen global defence spending growth
- Russian defence spending also experienced a slowdown due to fiscal difficulties. This made it challenging to maintain previous spending levels
- European defence spending is on the rise, with projections indicating an increase of around 9% in real terms. This growth is largely driven by military investments in Germany
- Countries like the UK and France are contributing to the structural shift in European defence spending. This is occurring despite their fiscal constraints