NATO Allies Outspend America on Defence for the First Time, as Global Military Budgets Hit Record Highs
America’s allies collectively outspent the United States on defence in 2025 — a historic shift that marks the most significant realignment of Western military burden-sharing since the aftermath of the September 11 attacks, according to new data from the Stockholm International Peace Research Institute (SIPRI).
Global Spending Reaches $2.9 Trillion
Total world military expenditure rose to $2,887 billion in 2025, a real-terms increase of 2.9 per cent over the previous year. The United States, China, and Russia together accounted for $1,480 billion — just over half of the global total.
Yet it is the composition of that spending, rather than the aggregate figure, that marks 2025 as a watershed year. American defence expenditure fell by 7.5 per cent in real terms, dropping to $954 billion, largely because Congress approved no new financial military assistance for Ukraine during the year.
Europe’s Fastest Rearmament Since 1953
European NATO members increased their defence budgets at the fastest rate since 1953, with spending rising by 14 per cent across the continent. The acceleration reflects both a genuine strategic reassessment following Russia’s war in Ukraine and sustained pressure from Washington to redistribute the costs of collective defence.
The shift is producing concrete results. Norway became the first European ally in recorded NATO history to surpass the United States in defence spending per capita, according to the Atlantic Council — a symbolic milestone that underscores how dramatically the alliance’s financial architecture is changing.
Military expenditure in Asia and Oceania rose by 8.1 per cent, driven by continued concern over Chinese military expansion and regional instability.
Washington’s Spending Set to Rebound Sharply
The American retreat from the top of the per-capita rankings is unlikely to be permanent. Congress has already approved defence spending of over $1 trillion for 2026, a substantial recovery from 2025 levels. President Trump’s latest budget proposals, if enacted, could push that figure to $1.5 trillion by 2027.
That prospective surge will test whether European governments can sustain their current momentum — or whether the familiar dynamic of American dominance reasserts itself once Washington reopens its chequebook.
Structural Pressures Show No Sign of Easing
SIPRI analysts warn that the upward trajectory in global military spending is unlikely to reverse in the near term. With active conflicts, contested borders, and long-term rearmament targets driving procurement decisions across multiple continents, further increases through 2026 and beyond appear probable.
For policymakers in London, Brussels, and beyond, the data offer both an opportunity and a challenge: to lock in the institutional and industrial foundations of European defence before the political impetus fades — and before American spending once again renders allied contributions a secondary consideration.