Spain | An overview of defense spending. July 2026

Summary

The geopolitical context has driven Spain to enter an expansionary cycle and reach the defense spending target of 2% of GDP in 2025. A structural change aimed at military modernization through major programs is observed, with a central role for the domestic industry and greater European cooperation.

Key points

• Key points:
• Spain seems to have initiated a structural change in its defense policy. The Defense Plan made it possible to reach the 2% of GDP target in 2025, although consolidating this level of spending will require maintaining a sustained budgetary commitment over the coming years.
• The increase in spending is materializing in major modernization programs. The budget has translated into an unprecedented volume of Council of Ministers' agreements, multi-year contracts, and high-value contract awards, primarily aimed at air and land capabilities and weapon systems.
• The average monthly pace of contract awards stabilized at around EUR 200 million during the first half of 2026. On average, close to 65% of the awarded amount corresponded to supply contracts, around 30% to services, and approximately 5% to works.
• The domestic industry plays a central role in the defense effort. Contract awards are concentrated in a small number of large industrial groups and specialized hubs. The Spanish industry predominates in the land and maritime domains, while air capabilities show greater international cooperation.
• European demand drives Spanish defense exports. These are mainly concentrated in aeronautical capabilities and their primary destination is the European Union, especially Germany, Italy, and France.

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