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November 13, 2026
Partner, Chief Economist
European defense spending grew 16% last year and is expected to grow at double-digit rates for the next three years, see chart below.
NATO members have committed to spend 3.5% of GDP on core defense and another 1.5% on broader security, although fiscal constraints will influence how quickly countries get there.
Recent disruptions, from attacks on subsea cables to drones near airports, to supermarket fridges and outages affecting critical infrastructure, may bring forward the need for that broader 1.5% security spending.
But where this spending goes is also broadening beyond traditional weapons and defense technology. Spending increasingly includes cybersecurity, critical infrastructure, maritime and pipeline sensors, resilient energy systems, as well as the local industrial capacity needed to manufacture and secure resilient supply chains. Many of these businesses serve both commercial and national-security markets.
The bottom line is that some of the next beneficiaries of Europe's defense buildout may sit in infrastructure, energy and industrial technology rather than in the defense sector itself.
Written by Huw van Steenis
Note: Western Europe aggregate. Sources: SIPRI Military Expenditure database, Apollo European Economic and Policy Strategist
Note: 2026 figures are estimates. Sources: NATO, Defence Expenditure of NATO Countries, Apollo European Economic and Policy Strategist
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