Spain | How defense spending is changing

Spain has entered a new defense investment cycle. According to NATO, the country has already reached the goal of allocating 2% of its GDP to defense, a threshold that seemed distant a few years ago. However, the change is not limited to the volume of resources, but also their composition. Understanding how this investment effort is evolving requires new analytical tools, as official statistics are released with a lag of several months.

The outbreak of the war in Ukraine and the new geopolitical context have increased defense investment needs, pushing NATO toward more ambitious spending targets and the European Union to design a comprehensive plan to bolster its strategic autonomy. In light of this paradigm shift, both tracking and studying the impact of defense spending have gained prominence. However, this analysis is constrained by reliance on official sources—whether the General State Budgets, National Accounts, or NATO statistics—which follow different methodologies and, by their very nature, arrive with a delay.

When a government decides to acquire a frigate, an anti-missile system, or a helicopter fleet, the political decision occurs months, or even years, before the expenditure is reflected in public accounts. A lengthy process unfolds between the approval of a program, the tender, the contract award, and its execution, which traditional statistics barely allow us to track.

Every week, the Council of Ministers publishes summaries of approved agreements. Every day, new tenders and awards are registered on the Public Sector Procurement Platform. All this information is public; however, it is a labyrinth of documents written in administrative jargon that is practically impossible to analyze manually.

This is precisely where Big Data and artificial intelligence are transforming the way public policies are studied. At BBVA Research, we have developed a methodology combining automatic information extraction techniques, natural language processing, and artificial intelligence to build a high-frequency indicator of Spanish defense policy¹. The system systematically analyzes over 26,000 agreements found in the Council of Ministers' records published since 2013, identifies which ones genuinely correspond to defense actions, filters out irrelevant references, and classifies each action according to the type of military capability involved.

The result does not replace official statistics, nor does it measure budget execution or the impact of these decisions on National Accounts. Rather, it complements this information and allows us to observe the direction of defense policy in near real-time.

What emerges from this analysis is that Spain appears to have entered a new structural investment cycle². Since the Russian invasion of Ukraine, countries have stepped up their defense efforts, and Spain has been no exception. The sharp increase in spending recorded in 2025 has reportedly allowed the country to reach the 2% GDP threshold set by NATO, converging with the target scenario marked by the Alliance.

In any case, just as revealing as the increase in spending volume is the shift in its composition. Defense spending decisions approved by the Council of Ministers have gained increasing prominence, reaching an announced average annual amount of nearly €4.75 billion in 2025, compared to an average of €730 million in the 2013–2024 period. But these agreements also show that the increase is not solely driven by large modernization programs, as seen in previous years, but is spread across practically all investment categories of the military spectrum: from weapons systems to air capabilities, infrastructure, cyber defense, R&D, logistics, and ammunition. Everything points to a broad modernization process for the Armed Forces.

Furthermore, public tenders confirm that these decisions are materializing into contracts. Since mid-2025, an average of nearly €2 billion has been awarded, reaching historically high levels, with a strong focus on military equipment acquisition contracts, although services associated with maintenance, software, and communications are also growing.

The data further reveal how the Spanish defense industry is structured. A very significant share of public procurement is concentrated within a relatively small number of large industrial groups (the top fifteen contractor companies account for 43% of the total contracted amount in 2025), and across a few technology hubs distributed throughout the country. Madrid, Seville, Albacete, and Asturias concentrate a large portion of the design, manufacturing, and integration capabilities for major programs.

While the development of land and naval capabilities relies primarily on domestic manufacturers, major aeronautical programs show a much higher degree of cooperation with European partners, reflecting multinational initiatives like the Eurofighter. It is precisely the aeronautical sector that accounts for the bulk of Spanish exports, with the European Union itself being its main market.

This case highlights a trend that transcends the defense sector. For years, economic analysis has relied almost exclusively on official statistics featuring internationally accepted, uniform, and comprehensive methodologies, but which are subject to delayed availability. Today, it is possible to complement the analysis of these sources using the vast amount of information that public administrations publish daily. The combination of Big Data, natural language processing, and artificial intelligence allows large volumes of unstructured data to be transformed into useful indicators, improving the assessment of public policies with great immediacy.

Defense is a prime example, though not the only one. Infrastructure, the energy transition, healthcare, and innovation generate a growing volume of public information that can be analyzed using the same tools.

In a context where economic decisions are increasingly rapid, the way we measure them must follow suit. At the end of the day, data often tells the story before it ever appears in the budgets.