The Economic Impact of Europe’s Rising Defence Spending
16 pages · PDF · 17 July 2025 · Licensed single-user copy, watermarked to the buyer
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About this report
Europe is entering a new era of defence investment. In the wake of Russia’s 2022 invasion of Ukraine, many European governments have pledged to boost military spending after decades of post-Cold War decline.
NATO figures show that defence outlays by European Allies have climbed from roughly 1.66% of GDP in 2022 to about 2% in 2024 , with 23 NATO members now meeting the Alliance’s 2%-of-GDP spending target – a dramatic rise from only a handful of countries a decade ago. Leaders have even agreed on an ambitious new goal of 3.5% of GDP for core defence spending (plus another 1.5% on related areas) by 2035 .
Key questions this report answers
- How is Europe's defence spending rising (1.66% to ~2% of GDP, toward 3.5% by 2035) and with what fiscal multipliers?
- How do personnel, equipment and R&D spending differ in economic impact?
- How does domestic versus imported procurement affect keeping money and productivity at home?
- What fiscal strategies in Germany, France and the UK fund the buildup, and what inefficiency risks arise?
Inside this report
- Short-Term Boosts: Fiscal Multipliers and GDP Growth
- Not All Euros Are Created Equal: Personnel vs. Equipment vs. R&D
- Keeping the Money at Home: Domestic vs. Imported Procurement
- Productivity Potential vs. Risks of Inefficiency
- Funding the Buildup: Fiscal Strategies in Germany, France, and the UK
- Conclusion: Security and Economy Hand in Hand?
Who it's for
Strategy, corporate-development and investment teams that need an ecosystem-level view — budgets, industrial capacity and technology landscapes — before committing capital or capacity.
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Methodology, format & delivery
DFM reports are built from primary and official sources — TED procurement notices, CORDIS and the EU Funding & Tenders Portal, EIB operations, the NATO Innovation Fund portfolio, SIPRI data, official budget documents and company disclosures — read together with the underlying legal texts. Sources are cited in the document; it reflects them as of its publication date (17 July 2025). You receive a 16-page PDF, watermarked to you on every page, delivered on the confirmation page and by e-mail immediately after checkout (personal link valid 72 hours, up to 5 downloads). Guest checkout, single-user licence — Terms of Sale.
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