Europe's Defense Spending Reaches Record High: The SIPRI Report 2026 and the New Geopolitical Order

The annual data on global military spending trends published on April 27, 2026, by the Stockholm International Peace Research Institute (SIPRI) paints a picture of profound strategic change. With global defense spending of $2.887 trillion in 2025, the report marks the eleventh consecutive year of growth and a shift whose epicenter is no longer Washington, but Europe. The decisions made by European states in the past twelve months could shape the continent's security architecture for decades.

Perhaps the most notable figure in this report concerns the European NATO members. Their combined defense spending rose by 14 percent in 2025 to $864 billion — the highest level ever recorded by SIPRI for Europe and the strongest annual increase among European NATO states since 1953. This marks the first time since the Cold War that Europe has surpassed the United States as the primary engine of global military spending growth. Of the 29 European NATO members, 22 spent at least 2.0 percent of their gross domestic product on defense in 2025, a milestone that was considered unrealistic just a few years ago.

Germany is at the center of this development. With an annual increase of 24 percent to $114 billion, the Federal Republic reached the 2 percent of GDP mark for the first time since 1990 and even exceeded it significantly at 2.3 percent. This has not been a gradual process but the result of the rearmament policy driven by Chancellor Merz, which transformed the so-called special fund of 500 billion euros into real budget structures. Germany now ranks fourth in the world in defense spending, behind the United States, China, and Russia. The funds are being used, among other things, for the procurement of F-35 fighter jets, the expansion of cyber-electronic capabilities, the strengthening of infantry units, and the establishment of an independent space division of the Bundeswehr.

Spain recorded the highest percentage increase among the larger European NATO states, with a 50 percent rise to $40.2 billion, also surpassing the 2 percent threshold for the first time since 1994. Poland, which already ranked among the leading European defense spenders, continued its military buildup. The Netherlands, Sweden, and the Baltic states also significantly increased their budgets. Overall, this dynamic reflects a dual motivation: on one hand, the response to the ongoing war in Ukraine and the associated threat perception regarding Russia, and on the other hand, the growing pressure from Washington to make the burden-sharing within NATO fairer.

The war in Ukraine remains a central driver of European rearmament. Russia's military spending rose by 5.9 percent in 2025 to $190 billion, now accounting for 7.5 percent of Russia's gross domestic product — a share that reveals the enormous strains on the Russian economy. Ukraine increased its defense spending by 20 percent to $84.1 billion, which corresponds to 40 percent of Ukraine's GDP. As SIPRI researcher Lorenzo Scarazzato points out, in both countries, military spending as a share of total government expenditures has reached the highest level ever recorded. Both sides are expected to be unwilling to lower their levels in 2026: Russia benefits from rising oil revenues, while Ukraine hopes for a large loan from the European Union.

The figures for the United States suggest a countervailing trend at first glance. With $954 billion, American defense spending in 2025 was 7.5 percent lower than the previous year. However, this decline is almost entirely due to the absence of new military aid for Ukraine. The previous three years had included aid totaling $127 billion, which was not continued in 2025. The $1.5 trillion proposed by President Trump for 2027 underscores that the strategic rearmament of the United States is by no means being slowed down. Rather, the priorities are shifting: the focus is increasingly on nuclear and conventional modernization to maintain dominance in the Western Hemisphere and to deter China in the Indo-Pacific region.

For Europe, these developments raise fundamental strategic questions. The new NATO target set in 2025, which goes beyond the previous 2 percent, demands not only higher budgets but also better coordination of procurement, interoperable capabilities, and joint operational planning. As SIPRI researcher Jade Guiberteau Ricard warns, there is a risk that the boundaries between military and other defense and security-related expenditures will increasingly blur, reducing transparency and complicating the assessment of actual military capabilities. Germany has a special responsibility here: as the largest European economic area and now also the largest European defense budget, Berlin is expected not only to spend money but also to take a leadership role in creating a coherent European defense architecture.

The global dimensions are no less significant. China increased its military spending by 7.4 percent to $336 billion — the 31st consecutive year of increase. Japan's defense budget grew by 9.7 percent to $62.2 billion, the highest share of GDP since 1958. Taiwan's spending rose by 14 percent to $18.2 billion, the strongest increase since at least 1988, against the backdrop of intensified military exercises by the People's Liberation Army around the island. The three largest military spending countries — the United States, China, and Russia — account for 51 percent of the global total.

The SIPRI report 2026 marks a historic turning point. Europe has begun to take on the strategic responsibility that it should have assumed since the end of the Cold War but has long avoided. The question now is whether this process is sustainable or whether it will, as in the past, stall again with the next phase of détente. The signs point to continuation: orders for armaments have been placed, industrial capacities are being expanded, and the geopolitical situation allows for no relaxation. However, the data also show the growing asymmetry between European willingness for self-defense and American priority shifts towards the Indo-Pacific. Europe faces the challenge not only to spend more but to act more wisely, coordinated, and strategically coherently. The report provides the numbers — now politics must provide the answers.