EU must invest €500 billion in defense over next decade, commission warns
The European Union needs to increase defense spending by €500 billion over the next ten years. This investment is crucial for supporting Ukraine and strengthening Europe’s own defense capabilities. After decades of underfunding, EU leaders are struggling to agree on how to raise common defense funds.
No agreement yet on European Union defense spending strategy
On Monday, European Union leaders failed to reach a consensus on increasing joint defense spending. Despite their unity against potential U.S. tariffs under Donald Trump, no concrete steps were taken. Instead, national governments were urged to explore increasing their own military budgets first.
European Commission President Ursula von der Leyen stated that leaders have asked for an evaluation of how national defense investments can be increased. They also requested flexibility in the EU’s fiscal and deficit rules to accommodate higher military expenditures. Current regulations under the Stability and Growth Pact limit deficits to 3% of GDP and public debt to 60% of GDP. These restrictions make large-scale defense investments difficult.
Countries like Poland, Italy, and Greece are pushing for a review of these fiscal rules. They cite the precedent set during the COVID-19 pandemic when the EU temporarily suspended budgetary restrictions to support businesses and citizens.
Exploring alternative funding sources
EU leaders have also asked the Commission to explore other financing methods. These include modifying European Investment Bank (EIB) lending policies and encouraging private-sector investments in defense.
In 2024, the EIB, under President Nadia Calviño, increased its defense and security investments to €1 billion. This figure is expected to double in 2025. Von der Leyen stated that adjusting EIB rules would encourage private banks to follow suit, boosting military funding.
European Council President Antonio Costa hinted at additional innovative solutions. However, he did not address the politically sensitive issue of joint EU borrowing. This measure, once considered unthinkable, was implemented during the COVID-19 recovery plan. Some countries, such as Denmark, now support this approach, while fiscal “hawk” nations remain opposed.
Current defense budget falls short
The EU’s current eight-year budget, running until 2027, allocates €10 billion for defense. However, the Commission estimates that €500 billion is needed over the next decade to maintain support for Ukraine and bolster Europe’s own security.
To meet NATO’s minimum target of 2% GDP defense spending, European Union nations must invest an additional €60 billion annually. Many member states still fall short of this goal. Meanwhile, NATO is expected to raise this benchmark significantly in its upcoming June summit.
Simplifying procurement and strengthening military capabilities
Von der Leyen emphasized the need for joint defense procurement to improve efficiency and interoperability. Coordinating military purchases reduces costs and enhances European industrial capabilities. Leaders also discussed prioritizing investments in air and missile defense, military mobility, and strategic assets.
However, the debate over whether EU funds should be pooled for defense remains unresolved. French President Emmanuel Macron insists that common defense funding is vital for European strategic autonomy. In contrast, leaders like Lithuanian President Gitanas Nausėda argue that purchasing U.S. military equipment could improve economic relations with Washington.
Strengthening international security partnerships
EU leaders also discussed strengthening partnerships with NATO, the U.S., and the U.K. British Prime Minister Keir Starmer attended the Brussels meeting to reinforce cooperation. Further discussions are planned for a summit in the U.K. on May 19.
As Europe faces growing security threats, leaders must find a solution to fund defense effectively. The next steps will depend on balancing national interests with the urgency of strengthening European military capabilities.
