Europe's largest rearmament since the Cold War: The SIPRI Report 2025 and the new geopolitical reality of the continent

The Stockholm International Peace Research Institute published its annual report on global military expenditures on April 27, 2026, and the figures for Europe are historic. European defense spending rose by 14 percent in 2025 to 864 billion US dollars — the highest value that SIPRI has ever recorded for the continent. Among European NATO members, this was the strongest annual increase since 1953. These dimensions illustrate that Europe is undergoing a fundamental security policy transformation, the effects of which extend far beyond budget figures.

Global military spending increased by 2.9 percent to a total of 2.887 trillion dollars, marking the eleventh consecutive year of rising rates. However, the relatively moderate global growth rate is solely due to the United States. Without the US, global defense budgets grew by 9.2 percent. US spending fell by 7.5 percent to 954 billion dollars, primarily due to the fact that no new military aid for Ukraine was approved in 2025 — a sharp contrast to the cumulative 127 billion dollars of the previous three years. As SIPRI program director Nan Tian emphasized, however, this decline is likely to be short-lived: The US Congress has already approved over one trillion dollars for 2026, and President Trump's last budget proposal envisions a possible increase to 1.5 trillion dollars for 2027.

The actual center of global dynamics in 2025, however, was in Europe, and especially in Germany. Berlin broke the two percent mark of GDP for defense spending for the first time since 1990, increasing its budget by 24 percent to 114 billion dollars. The Bundeswehr thus experienced the highest defense budget in 36 years. In parallel, Rheinmetall awarded further contracts worth 1.04 billion euros under the framework contract for the Future Soldier System – Extended System (IdZ-ES). The federal government has also committed to reaching the mark of 3.5 percent of GDP by 2029 — a target that would have been considered politically impossible just a few years ago.

Germany has thus risen to become the largest military spender in continental Europe, a role historically associated with significant expectations and responsibilities. However, the transformation of the Bundeswehr from a neglected force to a modern, intervention-capable army requires more than just budget increases. The structural challenges — from recruitment to procurement acceleration to interoperable integration into multinational NATO formations — remain considerable. The political will is undoubtedly present, but the operational implementation will have to be measured over years, if not decades.

Other European NATO members also recorded dramatic increases. Spain's defense budget jumped by 50 percent to 40.2 billion dollars, thus also breaking the two percent mark for the first time since 1994. Poland spent 4.5 percent of its GDP on defense — the highest relative burden among all NATO members. Warsaw is advancing a massive modernization program that includes the purchase of Abrams tanks, HIMARS rocket launchers, and F-35 fighter jets. This Eastern European dynamic is directly attributable to the ongoing threat perception regarding Russia and has noticeably shifted the geopolitical weight within the alliance eastward.

Russia and Ukraine were in the fifth year of their war in 2025 and continued to massively increase their military spending. Russia reportedly spent 190 billion dollars, which corresponds to 7.5 percent of Russian GDP and a record 20 percent of total state expenditures. Ukraine increased its defense spending by 20 percent to 84.1 billion dollars — an astonishing 40 percent of Ukrainian GDP and 63 percent of total state expenditures. As SIPRI researcher Lorenzo Scarazzato noted, the share of military spending in the total expenditures of both countries reached the highest level ever recorded in 2025. These figures underscore the complete war economy of both states and the hardly foreseeable long-term economic and demographic consequences.

The NATO summit in June 2025 raised the alliance's target to five percent of GDP by 2035, with up to 1.5 percentage points allowed to be counted towards generally defined defense and security-related expenditures. However, SIPRI sees a growing danger here. Researchers explicitly warned of the possibility of creative accounting in achieving the new targets. They cited the report on Italy's attempt to declare the costs of building a bridge to Sicily as security-related expenditures as an example. Since NATO does not publish disaggregated data, independent verification is becoming increasingly difficult. The total NATO expenditures amounted to 1.581 trillion dollars in 2025, which corresponds to 55 percent of global military spending — a figure that, according to SIPRI's assessment, may not reflect the actual operational capacity of the alliance.

In Asia and Oceania, spending increased by 8.1 percent to 681 billion dollars, the strongest growth in the region since 2009. China's military budget grew by 7.4 percent to an estimated 336 billion dollars — the 31st consecutive year of increases. Taiwan recorded a jump of 14 percent to 18.2 billion dollars, the largest increase since at least 1988. Even Japan, long a symbol of security policy restraint, reached a military burden of 1.4 percent of GDP with 62.2 billion dollars — the highest value since 1958.

The strategic question arising from these figures goes beyond mere budget sums. As the Center for European Policy Analysis emphasized in an analysis on April 23, the crucial question is not how much money is spent, but whether this money builds real capabilities. Europe has the talent, the companies, and the research networks. What is lacking is a mechanism to transform innovations into deployable capabilities. Procurement cycles often take longer than a complete technology cycle — a state that is both strategically irresponsible and economically wasteful. The proposal for an innovation and enabling quota that reserves at least ten percent of all European defense procurements for disruptive technologies and aims to grow to 30 percent by 2030 deserves serious political consideration in this context.

The overall political balance is clear: Europe is undergoing the most profound security policy transformation since the end of the Cold War. The question of whether the continent will be able to translate this transformation into sustainable defense capability — and whether it will do so in a timely manner — will shape the European security architecture for the coming generation. The figures from SIPRI are impressive. However, numbers alone do not secure peace.