BEIRUT — Defense spending is on the rise in Europe, representing more than a fifth of all defense spending globally in 2025, driven primarily by big investments from Germany, according to a new report from The International Institute for Strategic Studies (IISS).
“IISS analysis shows that Europe accounted for over 21 percent of the global total in 2025 up from 17 percent in 2022. Spending in Europe increased by almost 13 percent in real terms in 2024 and in 2025 notably, Germany accounted for a quarter of this uplift, cementing its rank as the fourth largest defense spender globally,” Bastian Giegerich, director of Defense and Military Analysis at IISS, said with the release of the thinktanks annual Military Balance report.
The report said that overall international defense spending increased to $2.63 trillion in 2025 from $2.48 trillion in 2024.
IISS said in the report, which was published on the fourth anniversary of Russia’s invasion of Ukraine, that Europe’s push continues to be prompted by two factors: the continent’s “response to Russian aggression” and “reduced US willingness to underwrite regional security.”
As for Berlin, Bastian pointed out that in 2025, “German defense spending passed the $100 billion mark at $107 billion up from $86 billion in 2024. European NATO members spent on average 2.16 percent of GDP on defense.”
He added that further growth in defense expenditure in Europe “will depend on sustained political and public support amid significant fiscal pressures.”
Last year NATO members pledged to spend some 5 percent of GDP on defense, split between 3.5 percent on “core” defense capabilities and another 1.5 percent on national security-related capabilities. Bastian said today that some “fiscally constrained allies will struggle to meet the new target of 3.5 percent of GDP for core defense capabilities by 2035. In contrast, Germany, for instance, which was spending under 2 percent of GDP as recently as 2024 has already announced plans to reach the targets as soon as 2029.”
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“The IISS assesses that Russia spent $186 billion on defense in 2025 the equivalent of 7.3 percent of its GDP, and up from 6.7 percent in the previous year, while its military expenditure increased by just 3 percent in real terms compared with the 56.9 percent in 2024. This could be largely the effect of financial reforms and efficiency measures in the Ministry of Defense,” Bastian said today in the launch event.
The report also highlighted European efforts to boost NATO’s Eastern flank’s defense capabilities, including focus on short range air defense systems and “Baltic Drone Wall” program announced in early 2025.
The rise in military spending also reached the Middle East, with the Kingdom of Saudi Arabia still the largest defense spender in the region and seventh worldwide.
“While Saudi Arabia remained by far the region’s largest defense spender, with a budget of over $72 billion, Israel and Algeria were the main sources of sources of growth. Algeria spent 8.8 percent of GDP on defense in 2025 the second highest rate globally, after Ukraine, while Israel spending increased to 6.5 percent of GDP, up from 5.9 [percent] in 2024 and an average of 4.1 percent in the five years before the [Oct. 7, 2023] attacks,” Bastian said today.
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He noted that countries in the region further increased exports and solidified defense development and production capability.
“For instance, Israel’s Ministry of Defense reported a 13 percent increase in defense export revenues, while defense conglomerates SAMI in Saudi Arabia and EDGE in the UAE pursued significant merger and acquisitions and joint venture activity to bolster capacity and expand their portfolios,” he said.
The report also noted “consistent uplifts” in China’s defense “budget over the last decade,” which has “outpaced growth in the wider region.” China’s “share of regional spending has grown to almost 44% in 2025, up from an average of 37% between 2010 and 2020.”