Europe promised cash for defence. It’s failing to cough up
Europe Promised Cash for Defence. It’s Failing to Cough Up
Europe promised cash for defence It s - A factory in northern Sweden hosts a Ukrainian flag emblazoned with Cyrillic text reading “thanks, always.” The emblem, placed by Ukraine’s 21st Brigade, symbolizes the collaboration between the nation and the facility, which produces hundreds of armored vehicles annually. Soldiers refer to the machines as “the Scandinavian beast,” a nod to their role in bolstering European security. The flag serves as a constant reminder to workers of their contribution to safeguarding the continent.
Once a struggling operation, Hagglunds factory—owned by BAE Systems, the UK’s largest defense company—has transformed into a booming hub. Production capacity has expanded five to six times since 2021, with revenue climbing from $211 million in 2018 to $1.1 billion in 2025. General Manager Tommy Gustafsson-Rask predicts it will surpass $2 billion annually. The workforce has grown to over 2,600 employees, a stark contrast to its earlier leaner days.
A New Era of Defense Spending
Europe’s rearmament push is reshaping economies, driven by a NATO pact to increase defense spending to 3.5% of GDP by 2035. The goal includes an additional 1.5% for security infrastructure. This surge funds modern equipment like missiles, drones, tanks, and warships. However, the cost of building stronger militaries is sparking debates across the continent.
"It is good to see that we have helped people," says Julia, a factory worker on an assembly line.
At a recent protest in Brussels, thousands rallied under the slogan “welfare, not warfare,” highlighting concerns about the financial burden. Italy’s trade unions had previously mobilized 500,000 demonstrators against defense budget hikes. The challenge for Europe lies in balancing military needs with social programs, requiring tough decisions on taxation or public spending.
Strained Promises and Unmet Targets
Despite pledges, Europe’s largest military powers may miss their 3.5% spending goal. Britain and France, for instance, are lagging. Britain’s defense secretary resigned after a budget increase deemed insufficient, with officials warning of cuts to education and healthcare. The planned boost only raises spending to 2.7% by 2030, leaving analysts skeptical about reaching 3.5% by 2035.
France’s target is even more modest, aiming for 2.5% of GDP by 2030. Meanwhile, countries like the Baltics and Poland, facing direct Russian threats, are leading the charge. They’ve implemented measures such as new taxes or reduced welfare programs to fund their increases. A rating agency estimates 11 European nations are financing at least half of their defense spending growth through such sacrifices.
The Cost of Defense: Borrowing, Taxes, and Trade-offs
Front-line nations, where public support for defense prioritization is strong, face fewer hurdles. Polling by the European Council on Foreign Relations shows broad backing for shifting resources toward military readiness. Countries like Denmark, Sweden, and Germany—whose low debt levels allow flexible budgeting—can borrow more easily. Germany, for example, targets 3.7% by 2030, giving it some margin.
Yet, the “smugly indifferent” group, including nations with less urgent security threats, shows no urgency. Their reluctance to commit to higher spending creates tension within NATO. Donald Trump, who once criticized Europe’s defense contributions, recently highlighted the disparity. His social media chart compared U.S. defense spending to that of several allies, calling the U.S. commitment “one-sided.”
As NATO prepares for its summit in Ankara, the gap between promises and progress threatens to widen. The debate over whether to invest in weapons or welfare remains unresolved, with economic pressures and political priorities shaping the outcome.