- In The Hague, allies agreed to raise defence and security spending to 5% of GDP by 2035.
- Spain secured room not to commit to that figure.
- Defence spending will grow across Europe for a decade: companies should follow how programmes take shape.
At the summit in The Hague on 24 and 25 June 2025, NATO allies agreed to raise defence and security spending to 5% of GDP by 2035. It is a target well above the previous commitment of 2% and represents a change of scale in the budget priorities of member countries, with consequences for their public finances and for the defence industry.
Spain secured room not to commit to that figure. The Government obtained flexibility on the target, which left the country partly outside the general commitment. The result combines a far-reaching collective decision with a differentiated position by one country that would continue to debate its own level of spending, both politically and with its partners. Understanding each position helps to read more clearly the news that will appear over the coming years.
A ten-year commitment
The target of 5% of GDP by 2035 is a political commitment between states, with a long horizon, which is then translated into budget decisions by each government, year after year. It is worth distinguishing between the announced target and actual spending, which shows up year by year in budgets, in awarded contracts and in the programmes that are really funded.
A ten-year horizon is long enough for governments, economic circumstances and priorities to change. The agreement therefore sets a direction more than an immediate obligation, and real compliance will depend on each country’s annual decisions. Even so, the signal to industry is clear: demand for defence will be larger and more stable. Stable demand is what allows companies to invest in capacity, hire specialised staff and plan several years ahead.
Spain’s position
That room, the result of the flexibility the Government had obtained on the target, did not close the question: it was a position that would remain a matter of political debate and of pressure from its partners.
That flexibility does not remove the domestic debate or the external pressure. For Spanish companies, the practical consequence is that national defence spending could grow at a different pace from that of other European countries, and that the clearest opportunities would be mainly in European projects rather than in the domestic market. Taking part in European consortia requires meeting common standards and building relationships with partners in other countries, which takes time.
What it means for companies
Defence spending was going to grow across Europe over a decade. For Spanish companies, the opportunity lay mainly in European projects and in the supply chain of other countries. Anyone who wants to take part should follow how programmes take shape and what procurement requirements they include.
Useful monitoring centres on three questions: which programmes are funded and on what timetable, who are the prime contractors to approach, and which certifications and security standards are required. With that information, a company can decide whether it is worth investing in preparing itself or focusing its efforts on the markets where it already competes with an advantage. Neither option is better in the abstract: it depends on resources, on the company’s culture and on the horizon with which the decision is made.
A ten-year commitment changes the planning horizon of an entire sector.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
