Europe’s rearmament push drives global military spending to record $2.9 trillion despite U.S. pullback
Israeli air defense systems were activated to intercept Iranian missiles over Tel Aviv, Israel, early on June 18, 2025.
Menachem Kahana | AFP | Getty Images
Europe’s boost to military spending in 2025 – a long-standing demand from US President Donald Trump – has helped global defense spending rise to a staggering $2.89 trillion. Stockholm International Peace Research Institute.
Major rearmament programs in Asia will also increase global defense spending for the 11th consecutive year in 2025, SIPRI said in a report published on Monday.
SIPRI said the increase was due to “another year of wars, uncertainty and geopolitical turmoil with large-scale arms drives.”
The report showed that the share of global military expenditures in GDP increased to 2.5 percent, its highest level since 2009.
Europe was the main driver of the increase in global spending, with spending rising 14% to $864 billion.
Except Russia, Germany The region’s largest military spenderExpenditures increased by 24% compared to the previous year, reaching $114 billion. Berlin’s military burden reaches 2.3 percent in 2025, exceeding NATO’s 2 percent target of GDP for the first time since 1990; it is a reference point where alliance members are encouraged to come together.
Spain’s military spending rose 50% to $40.2 billion, and its defense burden rose above 2% of GDP for the first time since the NATO spending target was adopted in 1994.
In June 2025, NATO members other than Spain set a long-term target to increase defense spending to 5% of GDP by 2025. Madrid had given up 5% commitment.
US spending decreased
While global defense spending continues to rise, the growth rate slows to 2.9% in 2025; this was well below the 9.7% increase in 2024. This was largely due to a 7.5% decline in US military spending after no new financial aid to Ukraine was approved during the year.
The USA continued to be the world’s largest defense spending country with $954 billion. China, the second largest country, increased its spending by 7.4% to an estimated $336 billion. Some experts argued that China’s actual number may be: much higherBecause Beijing does not fully disclose its military spending.
“The decline in US military spending in 2025 will likely be short-lived,” said Nan Tian, director of SIPRI’s military expenditures and arms production program.
The Pentagon has requested about $1.5 trillion in defense spending for fiscal 2027. which signs The biggest demand in history.
Asia jumped out
Spending in Asia and Oceania rose 8.1% to $681 billion in 2025, marking the largest annual increase since 2009.
“US allies in Asia and Oceania, such as Australia, Japan and the Philippines, are spending more on their militaries, not only because of long-standing regional tensions but also because of growing uncertainty about US support,” said Diego Lopes da Silva, senior researcher at SIPRI.
Taiwan’s military spending rose 14% to $18.2 billion, equivalent to 2.1% of GDP, marking the largest annual increase since at least 1988.
SIRPI said the increase comes amid the Chinese People’s Liberation Army’s intensified military activities around the island.
In 2025, China conducted two major military exercises around the island in April and December, while aircraft strikes around Taiwan increased from 380 in 2020 to a record 5,709 in 2025. local media reported.
Separately, Japan’s military spending rises 9.7 percent to $62.2 billion in 2025; This amounts to 1.4 percent of GDP – the highest share since 1958.
When Prime Minister Sanae Takaichi took office, he promised to increase defense spending to 2% of GDP; This reflects a broader shift in Tokyo’s security posture.
Tokyo lifted its export ban on lethal weapons in April and signed its first warship export project with Australia. Mitsubishi Heavy Industries It will build three new frigates for the Royal Australian Navy.
Defense stocks are on the rise
The spending boom has boosted defense stocks in Asia and Europe.
Shares of Seoul’s largest defender, Hanwha Aerospace, rose 193% in 2025, outpacing a 154% increase in 2024.
The company is known for producing the K9 self-propelled howitzer, one of the most exported systems of its type.
Other defense companies, such as Hyundai Rotem, the manufacturer of the K2 main battle tank, and air defense manufacturer LIG Nex1, also achieved gains of 278% and 91%, respectively, in 2025.
In Japan, Takaichi’s increased defense commitments lifted shares of companies in the sector even before Tokyo eased restrictions on arms exports.
Mitsubishi Heavy Industries increased by 72.7 percent Kawasaki Heavy Industry For 2025, it increased by 42.6%. IHI Company It increased by 107.1% throughout the year.
European defense firms also rebounded. of Germany Rheinmetall increased by 154% ThyssenKrupp 215% won.
In 2025, the European Union announced plans to fund up to 800 billion euros ($883 billion) by 2030 to support regional security.
While Rhienmetall produces infantry fighting vehicles, large-caliber weapons and air defense systems, ThyssenKrupp produces naval platforms such as frigates and submarines.
Berlin adopted a historic debt reform in March 2025, paving the way for a significant increase in defense spending.
in the UK, BAE SystemsSales of the F-35 Lightning II, which produces components for the Eurofighter Typhoon and F-35 Lightning II, rose 49.2 per cent by 2025 as the government vowed to increase Britain’s national defense spending.
