Germany targets €110 billion defense budget

The assumption that a ceasefire in Ukraine might soon slow military demand has broken down. Putin has rejected serious negotiations, according to NV, citing Reuters. Allied governments now plan as if the war will continue, and their budgets show it. The real test is no longer how much Europe spends but whether defence ministries and manufacturers can turn that money into usable military power before the next phase of the war demands it.

The Money Is Real

Germany anchors the fiscal shift. Chancellor Friedrich Merz proposed a 2027 defence budget of €109.7 billion, roughly a fifth of federal spending, plus €11.6 billion for Ukraine (Bundesfinanzministerium). Berlin aims to hit NATO's 3.5% of GDP target by 2029, six years ahead of the alliance's 2035 horizon (Deutschlandfunk).

Poland is further along. Warsaw spent nearly 123.6 billion zloty on defence in 2025, including 42.4 billion for modernisation, with US weapons purchases exceeding 45 billion zloty planned for 2026–2027 (Defence24). These commitments lock governments into years of factory orders and delivery schedules that stretch well past any hypothetical ceasefire.

Not every capital is moving at the same speed. Spain's Pedro Sanchez refused the 5% of GDP framework that NATO Secretary-General Mark Rutte proposed, split between at least 3.5% for core military needs and 1.5% for resilience (NATO, El Mundo). Spain was the only ally to reject it. Sanchez argues countries should be measured by what they field, not what they spend. Slovakia's Robert Fico, who claims direct channels to both Putin and Zelensky but has produced no visible result (Aktuality, Denník N), matters less as a mediator than as political cover for governments that want to slow military commitments while talking about peace.

Where the Money Gets Stuck

The spending surge exposes a production problem that finance ministries alone cannot fix. Germany stopped its F126 frigate programme over delays and cost overruns. The Eurodrone and FCAS fighter remain behind schedule (ZEIT). Poland's Prime Minister Donald Tusk warned the coming months could be "really critical," not because of a full invasion but because limited Russian provocations against infrastructure or borders could test whether NATO responds as one (TVN24, BBC).

European and Canadian allies pledged roughly €70 billion per year in military support for Ukraine across 2026 and 2027 (DW). EDIP (the EU's defence-industry programme for placing long-term orders for missiles, air-defence systems and drones) is shifting procurement from emergency purchases to multi-year contracts (DG DEFIS). SAFE (the EU's €150 billion joint fund for defence procurement) is supposed to channel that demand toward European factories.

The public still cannot see whether any of this is making Europe readier. NATO's capability targets, interceptor delivery timelines and ammunition stockpile levels stay classified. The Commission tracks inputs like budget pledges and planned production lines, not outputs like fielded units or readiness rates. According to Open Gate Italia, Italy cut its request from SAFE from €14.9 billion to €5 billion, a sign that even governments formally on board are hedging on how fast they absorb the shift.

The bottleneck sits between the ministers who announce budgets and the procurement agencies, shipyards and missile factories that have to deliver. Defence ministries sign contracts. Procurement offices manage specifications, testing and suppliers. Arms manufacturers set production timelines. When any link in that chain stalls, as Germany's frigate cancellation shows, money waits while units go unequipped. European ministers can count the money. They still have to prove it buys ammunition, interceptors and units that Russia would actually have to reckon with.