EU Defense Budgets Surge Amid Fiscal Challenges Following Ukraine Invasion

Written by Emily J. Thompson, Senior Investment Analyst

Source: Benzinga

Updated: Nov 19 2025

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Source: Benzinga

Increased Defense Spending: The Russian invasion of Ukraine has led to a significant rise in European defense budgets, with NATO allies surpassing the 2% GDP threshold for defense spending for the first time in 2025, and projected expenditures exceeding €800 billion by 2029.
Fiscal Concerns: Analysts express worries about the sustainability of the EU's increased defense budgets, particularly as countries like France face rising public debt, which is expected to reach 120% of GDP by 2027.
NATO's New Goals: At the 2025 Hague Summit, NATO leaders set a new defense spending target of 5% of GDP by 2035, with expectations that most member countries will meet or exceed the previous 2% target.
Impact on Defense Industry: European defense companies are experiencing substantial revenue growth due to increased military spending, with forecasts suggesting that rising defense budgets could boost EU GDP growth by 0.9-1.5% annually through 2028.

About the author

Emily J. Thompson

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.