Every EU member of NATO met the alliance’s 2% defence spending target in 2025 for the first time.
But a closer look at the figures reveals a continent split in two: a handful of front-line states racing ahead, while a large group does the bare minimum.
At the same time, around 40% of defence equipment spending goes to suppliers outside the EU, according to a recent report by Oxford Economics.
European governments are spending more on defence than at any point since the Cold War. Yet the increase in military capability is smaller than the headline spending figures suggest.
European NATO members lifted defence outlays by 14% in 2025 to around €739bn, the steepest rise since the 1950s, according to SIPRI figures reported by Euronews in April.
Collectively, the EU members of the alliance spent 2.5% of GDP on defence, up 0.4 percentage points in a single year. But the Baltics, Poland and Denmark remained well ahead of the pack, each spending more than 3% of GDP, according to NATO.
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At the top sits Poland, spending 4.48% of GDP on defence in 2025 — more than double the old benchmark and the highest in the alliance, ahead even of the United States at 3.22%, according to NATO estimates.
Behind it stands a wall of front-line states: Lithuania on 4%, Latvia on 3.73% and Estonia on 3.38%.
The pattern is striking: countries on NATO’s eastern flank, closer to Russia, dominate the rankings.
The Nordics form the next tier. Denmark reached 3.22%, Finland 2.77% and Sweden 2.51%, the latter two having abandoned generations of military non-alignment to join the alliance only in the past three years. Greece, a perennial heavy spender for reasons that owe more to Turkey than to Moscow, sits on 2.85%.
Oxford Economics expects this cluster — Poland, the Baltics and the Nordics — to keep leading the field, with several already on a credible path towards 5% of GDP by 2035.
“The ramp up in defence spending has become one of the few positive growth drivers in Europe in a swathe of continuous negative shocks,” Tomas Dvorak, economist at Oxford Economics, said.
“We see the trend as durable, particularly with the German fiscal stimulus, which will provide positive demand spillovers to other EU countries,” he added.
The countries doing the bare minimum
Then there is the crowd at the bottom of the hill.
A striking number of member states landed in 2025 at almost exactly the 2% line and went no further.
Italy came in at 2.01%, France at 2.05%, while Spain, Belgium, Portugal, Czechia and Luxembourg all clocked in at a flat 2%.
Slovenia, Croatia, Slovakia, Bulgaria and Hungary are barely distinguishable from them, bunched between 2.02% and 2.06%.
And some are already easing off. Defence spending as a share of GDP actually fell last year in Hungary and the Czech Republic.
For 2026, Oxford Economics expects the EU as a whole to add just 0.1 percentage point, reaching 2.6% of GDP, a near-standstill after a year in which Germany, Italy and Spain each added around half a point.
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According to Oxford Economics, defence spending rose slightly faster than expected in 2025, with more of the money staying in Europe than anticipated.
However, part of that increase reflects accounting rules rather than a genuine increase in military capability.
NATO figures are self-reported and recorded on a cash basis, the consultancy’s economists Tomas Dvorak and Nicola Nobile note, so advance payments for multi-year orders can inflate the numbers years before any hardware arrives.
The new target even includes a 1.5% slice for “defence-related” infrastructure with no clear definition, and Oxford Economics points to anecdotal evidence of governments trying to pass off civilian projects such as hospitals as military spending.
The part of the increase that is solid came mostly from hardware.
Equipment alone drove about 0.5 of the 0.9 percentage-point rise in defence spending relative to GDP since 2021, and now makes up roughly a third of the total, up from a quarter five years ago.
The target nobody is really near
The uncomfortable arithmetic is what the new goal demands.
The Hague summit set a headline figure of 5% of GDP by 2035, of which 3.5% must go on core defence.
Measured against that 3.5% line, almost the entire continent is short.
The NATO average in 2025 was 2.76% of GDP.
Outside Poland, Lithuania and Latvia, countries already clearing the core target, every large European economy would need to lift core spending by between one and one and a half percentage points of GDP — Italy, Spain, Belgium, Portugal, the Czech Republic and Luxembourg by a full 1.5 points each.
Where the money actually goes
For European industry, the decisive question is not how much is spent but where it lands, and a large share never reaches a European factory.
Oxford Economics estimates that around 40% of the EU’s defence equipment spending is imported from outside the bloc.
In other words, roughly two of every five euros spent on defence equipment go to suppliers outside the EU.
The leakage is concentrated in the systems Europe cannot yet build at scale: long-range strike weapons, long-range air defences, early-warning and detection, tactical lift, fifth-generation stealth fighters and large drones. Europe also leans on imported microchips and risks falling behind on battlefield AI.
“Europe has a complex defence manufacturing sector, but low initial capacity and gaps in some capabilities and home-grown technologies mean a sizeable amount of defence equipment is imported,” Dvorak said.