Europe rearms: the political fight over how to pay for the EU’s defence push
The European Union is rearming at a pace not seen in a generation. NATO’s European members have collectively crossed the 2% of GDP defence spending floor, with several capitals — Poland, the Baltic states, Greece — well above 3%. The political fight in 2026 is no longer about whether Europe should spend more on defence. It is about who pays, how, and on what.
The rearmament numbers
According to NATO and Commission data, EU member states will collectively spend hundreds of billions of euros on defence in 2026 — a sharp increase from the pre-2022 baseline. Procurement budgets are rising fastest, particularly for air and missile defence, ammunition stocks, electronic warfare, and unmanned systems. Industrial capacity is the bottleneck: order books at major European defence contractors stretch years into the future.
The funding fight: joint debt or national budgets?
The most divisive question in Brussels is whether to fund the rearmament through joint EU borrowing — building on the precedent of NextGenerationEU — or to leave it to national budgets supplemented by EU loans and guarantees. Germany, the Netherlands, and the so-called frugal states have historically resisted joint debt issuance for defence; France, Italy, Spain, Poland, and most southern and central member states have backed it.
The 2026 multi-annual financial framework (MFF) negotiations have, for the first time in EU history, defence as a central pillar. Earlier proposals envisaged a dedicated defence instrument worth tens of billions, but the final package and its financing structure remain under negotiation.
The European Defence Industrial Strategy
The Commission’s European Defence Industrial Strategy, adopted in 2024 and now in implementation, sets a target of procuring at least 50% of defence equipment from EU manufacturers by 2030. That goal is meeting industrial reality: Europe still imports significant high-end systems from the United States, and several capitals — including Berlin and Warsaw — have placed major orders with US firms in recent years. The tension between strategic autonomy and capability gaps is a permanent feature of the debate.
The political opposition
The rearmament push is not uncontested. Far-left parties across Europe have criticised the diversion of resources from social spending. Far-right parties, on the other hand, are split — some advocating sovereign rearmament outside EU frameworks, others questioning the strategic premises altogether. In Germany, the AfD opposes most NATO-aligned defence spending; in France, the Rassemblement National backs national rearmament but resists joint EU instruments.
What to watch in 2026
Three votes will define the year. The MFF agreement, which will fix the EU’s defence financing architecture for 2028-2034. The national defence budgets in Germany, France, Italy, and Poland, which together account for the bulk of EU spending. And the European Council conclusions at successive summits, which will signal whether the political consensus around rearmament holds — or whether it begins to fracture under fiscal pressure as growth slows across the bloc.
