The expansion of Russia’s military operations and the launch of a full-scale invasion in early 2022 marked a turning point in the development of military preparedness in Europe. In this fifth and final post of my blog series, I discuss the strongly increased—and still increasing—defense budgets across Europe.
Military preparedness in transition
After the Cold War, many European countries reduced their level of military preparedness. Finland, however, relied on an independent and credible defense capability and therefore maintained its level of preparedness.
The escalation of Russia’s military actions and the onset of a full-scale war in early 2022 were a pivotal moment for military preparedness across Europe. The security environment in Finland and Europe deteriorated significantly as large-scale warfare returned to the continent.
Finland needed a new defense solution and initiated the process of joining the NATO alliance. Many European countries recognized the urgent need to raise their level of military readiness. As of writing, large-scale military operations in Ukraine are still ongoing. While there have been efforts to initiate peace negotiations, Russia’s commitment to genuine talks does not currently appear credible.
European defense spending on the rise
Since spring 2022, defense spending in Europe has been growing rapidly. At the end of February 2022, Germany announced a €100 billion defense package. At the same time, it pledged to raise its defense budget above 2% of its GDP, a significant leap from the previous year’s level of just 1.4%. Though this news is now over three years old, it still marks a critical turning point in Germany’s defense policy.
Since then, the pace has only accelerated: In 2024, the Nordic countries, the Baltics, Poland, and Germany all met NATO’s target of allocating at least 2% of GDP to defense spending.
Following the 2025 U.S. presidential election, concerns have grown in Europe over whether the United States is reducing its role in NATO and its commitment to European defense. These concerns have further fueled significant decisions across Europe to boost defense investments.
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Finland to increase defense budgetIn April 2025, the Finnish government decided to raise its defense budget to at least 3% of GDP by 2029. This decision represents an increase of €600 million compared to previous levels by 2028, and €3.0 billion by 2029. In addition, a one-time increase of €50 million for defense materiel acquisitions was announced for 2027.
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Sweden, Norway, and Denmark strengthen armed forcesMilitary preparedness has been a central theme in the Nordic countries. Sweden and Norway are focusing on increasing the number of wartime troops, acquiring new equipment, and improving their ability to operate simultaneously at home and within NATO territories. At the end of March 2025, Sweden announced nearly €28 billion in additional funding for its armed forces over the next ten years Denmark is also developing its armed forces, placing emphasis on strengthening conscription. Increasing the wartime strength of armed forces also means increased materiel acquisition, as new troops require equipment and resources.
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Baltic states reinforce national defenseThe Baltic states have also been significantly strengthening their military preparedness in recent years. These countries are reinforcing their national defense and enhancing their capacity to receive and host allied reinforcements flexibly. Estonia is particularly focused on strengthening its armed forces’ material capabilities, especially in weapons, ammunition, and infrastructure. Latvia and Lithuania are undergoing major defense changes as they reintroduce conscription systems. Restoring conscription is neither a small nor a quick task—it’s a substantial, long-term reform.
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Poland aims for Europe’s largest land forcesPoland has declared its goal of building the best and largest land forces in Europe. It has rapidly and effectively increased its military readiness in recent years, acquiring a significant number of fighter jets, helicopters, artillery systems, air defense systems, and tanks.
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Germany announces historic defense and infrastructure packageThe most notable European defense budget news of spring 2025 came from Germany. In a March decision, the German Bundestag approved a historic defense and infrastructure package, enabling massive public investment through debt funding over the coming years. The total estimated value of the package exceeds €1,000 billion—a colossal sum by European standards. |
Ukraine aid program boosts domestic defense industry
In addition to countries investing heavily in their own defense capabilities, it remains crucial to provide sufficient support for Ukraine.
A positive development for the Finnish defense industry was the February 2025 announcement by the Ministry of Defense of a new Ukraine aid program. It includes €660 million worth of Ukraine-related orders directed to the Finnish defense industry.
“With this new aid program, Finnish companies and expertise will play a central role in supporting Ukraine,” said Defense Minister Antti Häkkänen in the Ministry’s press release.
Defence industry is a growth sector
It’s clear that the defense industry is now—and will continue to be—a true growth sector. Ensuring peace and stability in today’s unstable geopolitical environment requires investments that help safeguard the independence and sovereignty of nations.
Maintaining peace requires a strong deterrent—and that is precisely what Europe is currently building. These significant investments are well justified because, ultimately, they concern the safety of all Europeans.
Mectalent has operated in the defense industry for over 20 years. We are a top expert in product development, equipment manufacturing, and precision mechanics. Our work has included the production of critical components, weapons system parts, and parts for explosive devices.
Author’s closing remarks
This is the fifth and final post in my blog series on the defense industry. In previous posts, I’ve covered topics such as the unstable operating environment, Finland’s new defense strategy, Finland’s model of comprehensive security, preparedness for emergencies, and the role and contribution of the domestic defense industry.
If this or any other article in the series raises questions or prompts feedback, we welcome your thoughts!
Read the other parts of the defence industry blog series:
>> Finland’s operating environment has transformed as a NATO member
>> Domestic defence industry plays a key role in Finland’s new defence approach
>> The Finnish concept for comprehensive security: A global benchmark
>> Security of supply safeguards society in times of crisis
Aleksi Heikkilä
Defence Advisor
Mectalent Oy
Mectalent’s Defence Advisor Aleksi Heikkilä holds a Master’s degree in Military Sciences and has served in officer roles in the Finnish Defence Forces. In the business world, he has worked in security and the defense industry since 2015. Thanks to his career, Heikkilä has built an extensive network within defense industry companies, the Defence Forces, and Finland’s national emergency supply organization.
Sources used in this blog:
Government defence report, Ministry of Defence, Helsinki 2024
Yle: Scholz revolutionized Germany’s foreign and security policy with a single speech – €100 billion Increase in defence spending, 27 February 2022
Yle: “We will no longer be a colony of Russia”, 3 February 2024
Press Release: Government’s general government fiscal plan for 2026–2029, 23 April 2025
Suomenmaa: Germany to invest over €1,000 billion in infrastructure and defence – How Finnish export companies will benefit, 18 March 2025
Ministry of Defence: New Ukraine support programme directs €660 million in orders to Finland’s defence industry, 26 February 2025
