European defence spending soars by 14% in 2022, says Sipri

European defence spending soars by 14% in 2022, says Sipri
Lockheed-Martin's F-16 fighter jet has been cleaning up in Central and Southeastern Europe. / bne IntelliNews
By bne IntelliNews April 25, 2023

European defence spending soared by 14% in real terms in 2022 – the steepest y/y rise for 30 years and the biggest rise among all regions – according to new data published on April 24 by the Stockholm International Peace Research Institute (Sipri).

Warring Russian and Ukraine led the way but Central and Western Europe also spent more in real terms than in 1989, the last year of the confrontation with the Soviet Union.

Total global military expenditure increased by 3.7% in real terms in 2022, to reach a new high of $2,240bn. Global defence spending has now been on an upward trend for two decades, following a sharp decline at the end of the Cold War.

The three largest spenders in 2022 — the United States, China and Russia — accounted for 56% of the world total. The US remains by far the world’s biggest military spender at $877bn, accounting for 39% of the global total.

Russian military spending grew by an estimated 9.2% in 2022, to around $86.4bn. This was equivalent to 4.1% of Russia’s gross domestic product (GDP) in 2022, up from 3.7% of GDP in 2021.

"The difference between Russia’s budgetary plans and its actual military spending in 2022 suggests the invasion of Ukraine has cost Russia far more than it anticipated," said Dr Lucie Béraud-Sudreau, director of SIPRI’s Military Expenditure and Arms Production Programme.

Ukraine’s military spending reached $44.0bn in 2022. Sipri said the rise, at 640%, was the highest single-year increase in a country’s military expenditure it had ever recorded. As a result of the increase and the war-related damage to Ukraine’s economy, military spending as a share of GDP shot up from 3.2% in 2021 to 34% of GDP in 2022, the highest figure in the world.

Military expenditure by states in Central and Western Europe totalled $345bn in 2022, 30% higher than in 2013. 

"The invasion of Ukraine had an immediate impact on military spending decisions in Central and Western Europe. This included multi-year plans to boost spending from several governments,’ said Dr Diego Lopes da Silva, senior researcher with SIPRI’s Military Expenditure and Arms Production Programme. ‘As a result, we can reasonably expect military expenditure in Central and Western Europe to keep rising in the years ahead."

Sipri said some of the sharpest increases were seen in Finland (+36%), Lithuania (+27%), Sweden (+12%) and Poland (+11%).

Military spending by Nato members totalled $1,232bn in 2022, which was 0.9% higher than in 2021. The only significant decline among Nato members was Turkey, where spending fell for the third year in a row, reaching $10.6bn — a decrease of 26bn from 2021.

Nato members also need to boost spending to fill holes created by supplies sent to Ukraine. Central and Eastern European countries have been among the quickest to respond to the enhanced threats caused by the Russian invasion of Ukraine. Having sent most of their Soviet-era stock to Ukraine,  increasingly CEE's Nato members are dipping into their own stocks of modern Western made weapons and those stocks are starting to run low.

"While the full-scale invasion of Ukraine in February 2022 certainly affected military spending decisions in 2022, concerns about Russian aggression have been building for much longer,’ said Lorenzo Scarazzato, researcher with SIPRI’s Military Expenditure and Arms Production Programme. "Many former Eastern bloc states have more than doubled their military spending since 2014, the year when Russia annexed Crimea."

Nato set a 2% of GDP target for members in 2014 but this has now virtually become a floor, with Poland and the Baltic states all seeking to spend much more than that.

Poland plans to spend 4% of GDP this year. Last year, Poland – which plans to double the size of its armed forces to 300,000 – was already proportionally Nato’s third-highest spender, after Greece and the US.

Warsaw has gone on a spending binge for US military technology. It announced in February a $10bn purchase of almost 500 Himars artillery systems produced by Lockheed Martin.  It is also buying F-16 and F-35 fighter jets, Apache helicopters, Abrams tanks, more Patriot missile systems, as well as lighter equipment such as Humvees or Javelins.

Last year Poland also became one of South Korea’s biggest military customers, including a $5.8bn contract for tanks and howitzers.

In terms of domestic production, Poland makes Krab howitzers, Piorun anti-aircraft missiles and Rosomak infantry vehicles.