The Rise of Global Military Spending

Global military expenditure reached $2,718 billion in 2024, a 9.4 per cent increase in real terms from the previous year and the steepest year-on-year rise since at least the end of the Cold War, according to the Stockholm International Peace Research Institute. The figure represents the tenth consecutive annual increase in global defence spending, a decade-long unbroken escalation that has no equivalent in the post-1945 record. Over 100 countries raised their military spending in 2024. The world's fifteen largest military spenders all increased their expenditure simultaneously. The global military burden, meaning the share of world GDP devoted to defence, rose to 2.5 per cent, the highest level since the early 1990s. What is emerging is not a temporary surge driven by a single conflict but a structural rearmament cycle whose economic, fiscal and geopolitical consequences will compound for decades.

The post-Cold War period was defined by what analysts described as the peace dividend: the reallocation of defence budgets toward social programmes, infrastructure and economic development following the collapse of the Soviet Union. Many Western governments dramatically reduced military spending through the 1990s. By the early 2000s, the structural assumption embedded in NATO procurement planning was that future conflicts would be brief, technologically decisive and structurally unlike the prolonged industrial wars of the twentieth century. Precision weapons would substitute for mass. Quality would substitute for quantity. That assumption rested on a geopolitical environment that no longer exists.

Russia's invasion of Ukraine in February 2022, rising strategic competition in the Indo-Pacific and persistent instability across the Middle East and the Sahel have fundamentally altered the calculus of defence planning across every major regional grouping. Governments that spent a generation reducing military budgets are now rebuilding from a depleted industrial base, discovering that the production lines closed in the 1990s cannot be reopened in months, and that the strategic assumptions discarded after the Cold War were not made obsolete by history but merely deferred. Between 2015 and 2024, world military expenditure rose by 37 per cent in real terms. The biggest increase was in Europe at 83 per cent, followed by Asia and Oceania at 46 per cent, the Americas at 19 per cent, the Middle East at 19 per cent and Africa at 11 per cent. These are not marginal adjustments to policy. They are a structural transformation of the global security economy.

The most dramatic single transformation in global defence spending has occurred in Europe, where military expenditure increased by 17 per cent in 2024, pushing European collective spending beyond the level recorded at the end of the Cold War for the first time in the post-Soviet era. Every European country increased its military budget in 2024 except Malta. Seventeen of the thirty European NATO members reached or surpassed the alliance's 2 per cent of GDP spending guideline, the highest number to hit that threshold since the target was formally adopted in 2014. The political and industrial implications of this shift are still being fully appreciated.

Germany's transformation is the most symbolically significant. German military expenditure increased by 28 per cent in 2024 to reach $88.5 billion, making Germany the largest military spender in Central and Western Europe and the fourth largest in the world, ahead of India. For the first time since reunification, Germany is the biggest military investor in Western Europe. This is a country whose post-war constitutional culture had embedded strategic restraint as a national identity marker for seven decades. That identity has not been abandoned lightly, but it has been subordinated to the strategic reality of a war on the European continent. Poland increased spending by 31 per cent to $38 billion, representing 4.2 per cent of GDP. Romania by 43 per cent. The Netherlands by 35 per cent. Sweden by 34 per cent. These are not marginal adjustments. They are a generational reorientation of national resource allocation.

Military spending in Asia and Oceania has risen for the thirty-fifth consecutive year. China's defence expenditure grew by 7 per cent in 2024 to reach $314 billion, continuing a thirty-third consecutive annual increase. China accounts for half of all military spending across the Asia-Pacific region, and the strategic responses it is triggering across neighbouring states are driving the region's overall spending trajectory more directly than any other single factor. Japan increased defence spending by 21 per cent in 2024, its largest year-on-year rise since 1952 and a figure that reflects the formal revision of Japan's post-war security doctrine to permit a substantially more active defence posture. South Korea, Australia, Taiwan and the Philippines have all expanded their defence investments significantly, driven by explicit concern about Chinese military modernisation and the security of the South China Sea and Taiwan Strait.

The strategic logic underlying these increases is straightforward and will not easily reverse. Countries whose security depends on maritime corridors through which one-third of global trade passes, and which face a neighbour that has increased military spending by an estimated 72 per cent in real terms between 2014 and 2024, do not have the option of maintaining Cold War-era procurement levels. The Indo-Pacific arms expansion is not a policy choice in the conventional sense. It is a structural response to a changed threat environment, and its momentum is self-reinforcing: as spending rises on one side, it triggers compensating increases on the other, in a dynamic that has no natural equilibrium point below the escalating targets that governments are now setting.

The rising cost of military technology is a structural driver of defence spending growth that is independent of geopolitical tensions and will persist regardless of whether specific conflicts are resolved. Modern weapons systems are extraordinarily complex and commensurately expensive. A single F-35 fighter aircraft costs approximately $80 million per unit, with a lifetime programme cost projected to exceed $1.7 trillion. A Virginia-class nuclear submarine costs approximately $3.4 billion. A Patriot missile battery costs $1 billion, with individual interceptor missiles costing up to $4 million each. These figures reflect the genuine engineering complexity of systems designed to operate in contested electronic and kinetic environments against adversaries investing similar resources in countermeasures. The cost is structural, not discretionary.

Emerging technologies are adding new layers of expenditure above the already substantial baseline of conventional procurement. Artificial intelligence systems, cyber capabilities, space-based assets, autonomous weapons platforms and electronic warfare infrastructure all require sustained investment in research, development and the specialised manufacturing base needed to produce them at scale. Governments are simultaneously discovering that defence production cannot be treated as a dormant industrial capability that can be reactivated on demand. The skilled engineers, metallurgists, explosive chemists and precision machinists required to operate advanced defence production lines cannot be trained in months. Supply chains for critical components, from semiconductors to rare earth elements, cannot be secured through emergency purchasing alone. The strategic industrial policy implications of this realisation are reshaping national economic planning across the world's major defence-producing states.

The macroeconomic consequences of this level of sustained defence spending expansion are significant and largely unaddressed in strategic debate. Defence spending can stimulate industrial activity, support employment in advanced manufacturing and drive technological innovation that eventually benefits the civilian economy. These benefits are real and should not be dismissed. But they are partial, and they come with opportunity costs that are equally real and considerably less discussed. Every dollar allocated to defence procurement is a dollar that cannot be spent on education, healthcare, infrastructure or climate transition investment. This is not an ideological argument. It is a basic constraint of public finance that applies regardless of how necessary the defence expenditure is judged to be.

The UN Secretary General's 2025 report on military spending and the Sustainable Development Goals documented the consequences of this trade-off with unusual directness. Total official development assistance from OECD Development Assistance Committee members fell for the first time in many years in 2024. The United States dismantled USAID. The United Kingdom cut its overseas development assistance from 0.5 to 0.3 per cent of gross national income, explicitly reallocating the reduction to military spending. Statistical analysis cited in the UN report found that in lower and middle-income countries, a one per cent increase in military expenditure as a share of GDP is associated with a near-equal reduction in health expenditure. The guns-versus-butter trade-off is not a theoretical construct in these contexts. It is a documented empirical relationship with measurable consequences for the health and development of populations who had no voice in the decision to rearm.

For the Global South, the current rearmament cycle presents a particular and largely unacknowledged challenge. Many developing economies face genuine security threats, from Sahel insurgencies and Gulf of Guinea maritime insecurity to South Asian border tensions and Indo-Pacific strategic competition, that require real increases in defence investment. At the same time, they operate under fiscal constraints that leave no margin for the kind of sustained multi-decade defence spending expansions that major powers are currently committing to. The trade-off between guns and butter is not abstract in these contexts. It is an immediate operational constraint that shapes the quality of public services, the speed of infrastructure development and the prospects of human capital formation for a generation.

The structural implication is that the global rearmament cycle will deepen the gap between the security capabilities of major powers and those of developing states. As the United States, China, Europe and their allies invest at unprecedented rates in autonomous systems, AI-driven command structures, hypersonic weapons and advanced satellite constellations, the military technology frontier will move beyond the reach of states that cannot sustain comparable investment levels. The result is a bifurcation of the global security environment: a small tier of technologically sovereign military powers and a much larger tier of states whose security options are constrained by their inability to finance, manufacture or maintain the systems that define military effectiveness in the twenty-first century.