Global Military Spending Hits New Record! Geopolitical Conflict Drives 11th Consecutive Annual Increase

Ongoing geopolitical tensions have pushed governments to further ramp up defense investments, resulting in the 11th consecutive year of growth in global military spending.

 

According to the latest annual report from the Stockholm International Peace Research Institute (SIPRI), global defense expenditure grew by an estimated 2.9% last year (2025), reaching a record high of $2.89 trillion (approx. €2.5 trillion).

 

While the United States reduced its military support for Ukraine, the primary engine of this growth shifted to European investment.

 

SIPRI researcher Lorenzo Scarazzato noted that the U.S., China, and Russia collectively account for 51% of global military spending. Specifically, U.S. defense outlays exceeded $950 billion, though this represented a 7.5% decrease compared to 2024.

 

The decline in U.S. spending meant that the overall global increase was less pronounced than in previous years.

 

However, this was largely offset by a sharp 14% surge in European defense outlays—reaching $864 billion—driven primarily by the European Union’s increased support for Ukraine.

Europe Ramps Up Expenditure

Last year, the 29 European NATO members spent a combined total of nearly €500 billion ($559 billion), with Germany contributing the largest share.

 

According to SIPRI, this marks the most significant increase in European defense spending since 1953. In Germany, military expenditure skyrocketed by nearly 24% year-on-year.

 

SIPRI attributes this to Germany’s growing perception of a threat from Russia, compounded by concerns over diminishing U.S. interest in NATO.

 

Furthermore, Germany—along with many other NATO allies—is under intensifying pressure to guarantee its own defense, security, and military development.

 

In the conflict-ridden Middle East, defense spending remained largely flat. SIPRI noted that this was mainly due to a 4.9% decrease in Israel’s defense budget as the Gaza conflict moderated. However, Israel's current defense outlays remain double what they were in 2022.

An Ongoing Global Arms Race

The global arms race is expected to persist in the coming years, with U.S. defense spending projected to rebound sharply this year.

 

Scarazzato emphasized that early indicators point to a resurgence in U.S. outlays.

 

The American government’s FY2027 budget request calls for a staggering $1.5 trillion in military funding. Additionally, the ongoing conflict between the U.S. and Iran is expected to further drive up American military costs.