The European Union is in a position to allocate around €500 billion ($538.55 billion) to defence over the next four to five years, according to Fitch Ratings. However, governments must consider

measures to offset the fiscal impact and prevent a surge in budget deficits.

Federico Barriga-Salazar, Senior Director for Sovereigns at Fitch, explained that while the EU has suggested defence investment needs could reach €800 billion, Fitch’s estimate of €500 billion represents a more realistic and achievable figure.

“We’ve seen several recent announcements and pledges from EU governments,” Barriga-Salazar said. “Our goal is to assess what governments can realistically afford.”

The push for higher defence spending comes amid growing uncertainty over the United States’ long-standing role in safeguarding Europe’s security, a responsibility it has largely held since World War II.

Barriga-Salazar also warned that without compensatory fiscal measures, defence spending could push budget deficits up to 6% over the medium term.

Fitch projects that Europe’s overall defence spending will remain at about 2.5–2.6% of GDP through 2028. Photo by Ministerstwo Obrony Narodowej, Wikimedia commons.