Deloitte Study Projects EU Defense Spending to Exceed 3% of GDP by 2040

European Union member states will likely spend at least 3% of their gross domestic product on defense by 2040, according to a Deloitte study titled "The Future of Defence 2040." The projection marks a significant increase from 2025 levels of 2.1% of GDP, or approximately €381 billion, as reported by the European Defence Agency.

The study identifies several critical trends reshaping European security. Demographic shifts are creating a military personnel crisis, while artificial intelligence and automation are becoming increasingly integrated into defense systems. Outer space is emerging as a new battleground, and vulnerabilities persist in critical supply chains for semiconductors and rare minerals.

Alexandru Reff, Country Managing Partner of Deloitte Romania and Moldova, emphasized the strategic importance of dual-use infrastructure that serves both military and civilian purposes, calling it a solution that benefits governments, citizens, and economic actors. He noted that the current geopolitical context and significant uncertainties have created a necessity for long-term security and resilience solutions.

Alin Chitu, Tax Partner at Deloitte Romania and Defence Industry Leader, detailed financing opportunities available to Romanian companies, including grants, low-cost loans, and guarantee schemes such as SAFE, the European Defence Fund, EDIRPA, ASAP, and EDIP, complemented by European Investment Bank financing and InvestEU guarantees. Deloitte recommends that decision-makers build flexible institutional structures and that companies invest in adaptable systems and dual-use infrastructure to enhance long-term resilience.