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Chapter 3 of 8Defence3 min read · 3 exhibits

Part II: Country-by-country Analysis

Which countries lead, and which lag?

Chapter summary

Countries are grouped into four tiers, from the major powers and eastern flank leaders to accelerating spenders and laggards. Germany's lifted debt brake makes it the largest single increase.

Key takeaways

  1. 1

    Germany spent €90B (2.1% of GDP) in 2024 and needs €329B a year at 5%, an increase of 266%.

  2. 2

    Rheinmetall produces 1.1M shells a year; Germany plans €35B for space capabilities in 2026–2030.

  3. 3

    Spain, Belgium, Luxembourg, Portugal and Greece are grouped as laggards and special cases.

At a glance

Exhibit 3.1

Countries fall into four tiers, from major powers to laggards

Four tiers

  1. 1

    Tier 1 · Major powers

    Germany, France, United Kingdom, Italy

  2. 2

    Tier 2 · Eastern flank leaders

    Poland, Baltic states

  3. 3

    Tier 3 · Accelerating spenders

    Netherlands, Norway, Sweden, Finland, Czech Republic, Romania

  4. 4

    Tier 4 · Laggards & special cases

    Spain, Belgium, Luxembourg, Portugal, Greece

Source: European Defence Spending Surge: €800B ReArm Europe by 2030, Setcoin Research (October 2026)

Exhibit 3.2

Europe & UK accounts for 88% of defence awards and contracts on the Atlas

Defence awards and contracts on record, by region · awards & contracts on record

Europe & UK8,853
United States579
Asia-Pacific575
Source: Setcoin Atlas, public registers, live as of 2026-10-28

The chapter · 716 words · 3 exhibits

Tier 1: Major European Powers

Germany

Current Status (2024):

Exhibit 3.3 · Interactive model

Defence spending path to a NATO target

What does a country have to spend each year to reach a share of GDP by a given year, and how fast must its budget grow?

Download Excel model
Scenarios
€208.3BSpending in 2035
€118.3B (×2.3)Increase on 2024
7.9%Budget growth needed a year
€456.7BExtra spending 2025–2035 vs today's share
01002002024202620282030203220342035
Path to 3.5% of GDPHolding 2.1% of GDP€ billions a year · hover for values
Show the calculation table
YearGDP (€B)Share of GDPSpending (€B)At 2024 share (€B)
2,0244,3002.09%9090
2,0254,4292.22%98.492.7
2,0264,5622.35%107.295.5
2,0274,6992.48%116.498.3
2,0284,8402.60%126.1101.3
2,0294,9852.73%136.2104.3
2,0305,1342.86%146.9107.5
2,0315,2882.99%158110.7
2,0325,4473.12%169.7114
2,0335,6113.24%182117.4
2,0345,7793.37%194.9121
2,0355,9523.50%208.3124.6
Sensitivity: which input moves the answer most

What moves “Spending in 2035” most: each input 20% lower (left of a pair) and 20% higher

Target share of GDP−41.7 / +41.7
Nominal GDP growth a year−10.9 / +11.4
Spending rises in a straight line as a share of GDP, from the 2024 share to the target in the target year; GDP grows at the nominal rate.At 2024 GDP, 5% of GDP is about €215B for Germany, €150B for France and €110B for Italy. The study's country figures were corrected to these values on 22 October 2026; this model adds GDP growth explicitly.Additional spending is measured against holding the 2024 share of GDP constant.Source: European Defence Spending Surge: €800B ReArm Europe by 2030, Setcoin Research (October 2026)
  • Defense spending. €90B (2.1% GDP)
  • GDP 2024. ~€4.3T

Trajectory to 2035:

  • 3.5% target: €150B+ annually
  • 5% target: ~€215B annually (at 2024 GDP)
  • Increase needed. +€125B (+139%)

Key Initiatives:

  • Constitutional amendment (debt brake lifted, 2025)
  • Zeitenwende policy continuation
  • Rheinmetall expansion (ammunition, vehicles)
  • F-35 procurement underway
  • European Sky Shield Initiative leadership

Investment Priorities:

  • Ammunition production (Rheinmetall 1.1M shells/year)
  • Air defense modernization
  • Bundeswehr equipment renewal
  • Space capabilities (€35B 2026-2030)
  • Joint European programs

Political & Fiscal Challenges:

  • Coalition budget negotiations
  • Public spending priorities debate
  • Industrial capacity constraints
  • Skilled workforce shortage

France

Current Status (2024):

  • Defense spending. €62B (2.06% GDP)
  • GDP 2024. ~€3T
  • 2025 target: €62B (vie-publique data)

Trajectory to 2035:

  • 3.5% target: €105B annually
  • 5% target: ~€150B annually (at 2024 GDP)
  • Increase needed. +€88B (+142%)

Key Initiatives:

  • Loi de Programmation Militaire (LPM) 2024-2030
  • Nuclear deterrent modernization
  • SCAF (Future Combat Air System) with Germany/Spain
  • MGCS (Main Ground Combat System)
  • Aircraft carrier renewal

Investment Priorities:

  • Nuclear triad maintenance
  • Naval programs (carrier, SSNs)
  • Aerospace (Rafale, SCAF)
  • Space capabilities (€4.2B increase 2026-2030)
  • African presence sustainment

Political & Fiscal Challenges:

  • Debt 112% GDP (Moody's downgrade 2024)
  • Budget deficit pressures
  • Social spending conflicts
  • Industrial base modernization

United Kingdom

Current Status (2024):

  • Defense spending. ~€68B (~2.3% GDP)
  • GDP 2024. ~€3T

Trajectory to 2035:

  • PM Starmer commitment. 5% by 2035
  • 3.5% core + 1.5% resilience structure
  • Estimated. €105B (3.5%), €150B (5%)

Key Initiatives:

  • Strategic Defence Review 2025
  • AUKUS partnership (Australia, US)
  • Dreadnought-class SSBN program
  • Tempest 6th-gen fighter
  • Digital Targeting Web by 2027

Investment Priorities:

  • Nuclear deterrent (£31B Dreadnought)
  • Naval shipbuilding (Type 26, Type 31)
  • F-35B procurement continuation
  • Cyber & space capabilities
  • NATO eastern flank contribution

Political & Fiscal Challenges:

  • Post-Brexit budget realignment
  • NHS/social care spending pressures
  • Industrial capacity (shipyards)
  • Recruitment & retention crisis

Italy

Current Status (2024):

  • Defense spending. €33B (1.5% GDP)
  • GDP 2024. ~€2.2T

Trajectory to 2035:

  • 3.5% target: €77B annually
  • 5% target: ~€110B annually (at 2024 GDP)
  • Increase needed. +€77B (+233%)

Key Initiatives:

  • Leonardo expansion (aerospace, defense electronics)
  • FREMM frigates, PPA corvettes
  • F-35 program participation
  • Eurofighter Typhoon upgrades
  • Mediterranean security focus

Investment Priorities:

  • Naval modernization (critical)
  • Armoured vehicle renewal (Ariete replacement)
  • Air defense systems
  • Space capabilities (small satellites)
  • Cybersecurity infrastructure

Political & Fiscal Challenges:

  • Debt 135% GDP (highest in EU after Greece)
  • IMF fiscal reform pressure
  • Coalition government stability
  • Public opinion on military spending

Tier 2: Eastern Flank Leaders

Poland

Current Status (2024):

  • Defense spending. €25B+ (3.8% GDP - highest in NATO)
  • GDP 2024. ~€760B
  • Already surpassing 3.5% target

Trajectory to 2035:

  • Currently. 4.7% GDP (2025 declared)
  • On track for 5% by 2035
  • Estimated 2035. €58B at 5%

Key Initiatives:

  • US Patriot batteries (already deployed)
  • South Korean K2 tanks (1,000 units order)
  • HIMARS procurement
  • F-35A acquisition
  • Aegis Ashore site operational

Investment Priorities:

  • US equipment procurement (political hedge)
  • Border defense infrastructure
  • Air & missile defense layers
  • Artillery modernization
  • Territorial Defense Forces expansion

Strategic Position:

  • Front-line deterrent role
  • Ukrainian military support hub
  • US force presence host
  • Regional security leader

BALTIC STATES (8-10 pages combined)

Estonia:

  • Current. €1.2B (3.3% GDP)
  • 2035 projection: €2.3B (5%)
  • Focus. Air defense, cyber, territorial forces

Latvia:

  • Current. €1.1B (3.3% GDP)
  • 2035 projection: €2.1B (5%)
  • Focus. Host nation support, infrastructure

Lithuania:

  • Current. €2.3B (3.1% GDP)
  • 2035 projection: €4.3B (5%)
  • Focus. Heavy brigade, air defense

Collective Strategic Importance:

  • Suwalki Gap vulnerability
  • Host to NATO battlegroups
  • Russian border security
  • Regional cooperation (Baltic Defense Line)

Tier 3: Accelerating Spenders

Netherlands

  • Current. €18B (1.9% GDP 2024)
  • 2035 target: €31B (3.5%), €44B (5%)
  • Cabinet decision. 3.5% + 1.5% structure
  • F-35 program, submarine replacement

Norway

  • Current. €9B (2.4% GDP)
  • Arctic security focus
  • Oil wealth enables spending
  • 2035: €21B (5% est.)

Sweden

  • Current. €12B (2.0% GDP)
  • NATO accession 2024
  • Gripen production, submarine excellence
  • 2035: €30B (5% est.)

Finland

  • Current. €6B (2.3% GDP)
  • NATO accession 2023
  • 1,300km Russian border
  • Total defense concept
  • 2035: €15B (5% est.)

Czech Republic

  • Current. €5B (1.9% GDP)
  • Target. €13B (5%)
  • F-35 procurement
  • Ammunition hub role

Romania

  • Current. €6B (2.2% GDP)
  • Black Sea security
  • Patriot systems
  • 2035: €15B (5%)

Tier 4: Laggards & Special Cases

Spain

Exempt Status Analysis:

  • PM Sánchez rejection of 5% target
  • Agreed cap. 2.1% GDP
  • Rationale. "Disproportionate, unnecessary"
  • Fiscal constraints, social spending priority
  • US tariff threats response

Actual Spending Reality:

  • Extraordinary contributions often exceed budget 20%
  • Informal defense cooperation
  • Geographic position (NATO southern flank)

BELGIUM, LUXEMBOURG, PORTUGAL, GREECE (6-8 pages each)

[Similar structure for each country]

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Part I: Strategic Framework

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Part III: Sectoral Impact Analysis

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