31 March 2022
Reaction to Russia’s invasion of Ukraine helped push defence budgets back into expansion this year, and will see them grow at a rate of 1.6% annually in the coming five years, according to the latest figures from the trusted global agency for open-source defence intelligence
Recovering from a pandemic-induced contraction of 0.7% last year, total world defence spending grew to a new high of USD2.08 trillion in 2022, boosted by recent spending increases across Europe, according to a new report from Janes, the trusted global agency for open-source defence intelligence. Spending growth of 1.6% this year is the fastest seen in three years.
“Aside from a swift rise in 2018 when Donald Trump gave the US budget a big one-off boost, the rise of global defence spending has been quite restrained in the late 2010s and early 2020s, and the Covid-19 pandemic pushed budgets downward in real terms” says Andrew MacDonald, who manages defence budget research at Janes.
“This year we’ve seen spending rebound to much higher growth rate; faster than any year since 2018, driven to a large degree by a resurgence in rates of funding expansion in Europe. We’re expecting this to mark the beginning of a period of global growth much closer to historic norms.”
Acceleration of European spending has been building for several years
In dollar terms Europe added the most funding to its armed forces’ budgets this year; USD30.7 billion, although 80% of this increase is accounted for by Germany’s dramatic rise.
While this year’s spike in European growth was brought about in large part in reaction to Russia’s recent invasion of Ukraine, defence budgets on the continent have been expanding ever-quicker since Russia first began supporting the secession regions of Donetsk and Luhansk and annexed Crimea in 2014.
In the 10 years to 2015 Europe’s defence spend was almost totally static in real terms. In the 10 years that follow it’s on course to have grown at an average annual rate of 3.2%, or just over 45% across the entire period.
As such, defence spending in Europe is expected to reach USD414.2 billion in 2025, from USD373.4 billion in 2022 and USD284.7 billion in 2015.
“While several countries plan to increase the size of their armed forces, and operational costs will also grow to reflect the increased threat level, investment is still the area that will have the easiest time absorbing any defence budgetary increase in the short to medium term” said Ana-Roxana Popescu, Janes lead analyst for European defence budgets. “Defence investment is thus set to reach USD134.6 billion in 2025, from USD86 billion in 2021, a 57% increase.”
Although European budgets saw the fastest growth in 2022, North America and Asia remain the highest-spending regions by a large margin, each responsible for USD810 billion and USD610 billion respectively this year.
Reaction to Russia’s invasion of Ukraine helped push defence budgets back into expansion this year...