Overview
- IISS reports worldwide military outlays reached $2.63 trillion in 2025, a 2.5% rise year on year.
- Europe’s spending jumped 12.6% to about $563 billion, lifting its share above 21%, with Germany providing roughly a quarter of the recent uplift.
- The report says U.S. strategy is shifting toward homeland defense and tougher burden‑sharing, with 2026 spending expected to exceed $1 trillion and fund the proposed Golden Dome missile shield.
- European forces remain ill‑prepared for large‑scale strikes, the IISS warns, prompting pushes for integrated air and missile defense through efforts such as the European Sky Shield Initiative and the Baltic Drone Wall.
- Continental rearmament is outpacing the UK, which faces capability gaps and a projected £28 billion near‑term funding shortfall despite a pledge to reach 3.5% of GDP by 2035, while Russia adapts with spending around 7.3% of GDP and China accounts for nearly 44% of Asia‑Pacific outlays.