Prime Minister Pedro Sánchez has announced a 10.5 billion increase in this year’s defence spending, bringing Spain into line with the 2% target set by NATO. His left-wing minority government submitted the plan to the EU and NATO yesterday, the last day before the deadline for compliance. Defence expenditures accounted for just 1.4% of Spain’s total budget last year.
The announcement represents another unilateral initiative by the Socialist Prime Minister, whose coalition partner took issue with the decision, claiming it had been undertaken without “thorough, objective and consensual consideration” and terming the amount allocated as “exorbitant”. US Treasury Secretary Scott Bessent made it clear to Spanish Economy Minister Carlos Cuerpo last week that Washington expected Spain to raise its outlay on defence faster.
Unlike EU member states Belgium and Italy, which had indicated they hoped to reach the 2% target this year, Sánchez had prevaricated and took issue, for example, with the title of the EU programme, “Rearm”, which he deemed to be too militaristic.
Spain’s announced spending increase, which does not require parliamentary approval, is now called the “Industrial and Technological Plan for Security and Defence”. According to the government, the “manufacture or purchase of new defence and deterrent tools” accounts for 19% of the total, while 35% is allocated to “improving the working conditions, training, and equipment of our armed forces”, which is expected to add 7,500 new members.
With 31% earmarked for “new telecommunications and cybersecurity technologies” and 17% for civil protection, which in Spain is the responsibility of the army, Sánchez pointed out that Spanish companies would benefit from 87% of the investments, that GDP would increase by more than 0.4% and that up to 100,000 new jobs would result.
“This will happen without tax increases. Without cutting a single cent in investments in the welfare state, and without increasing the public deficit.” The International Monetary Fund (IMF) forecasts growth of 2.5% this year.
The newspaper El País hailed the announcement as a “change of era”, while El Mundo described it as a “colossal turnaround without parliament”. Sánchez will explain the plan to MPs next month but will not call for a vote, given that he can’t even be sure of the votes of his coalition partner, Sumar. As is, Podemos and the other parties he needs for an absolute majority have been calling for withdrawal from NATO. Meanwhile, the conservative People’s Party (PP) remains opposed to the move despite its demands that more should be spent on defence.
Faced with this, Sánchez is redirecting budget funds from the EU’s reconstruction plan and previously unused government funds. His financial options are limited. Since his re-election in late 2023, he has been unable to secure a majority for a new budget, leaving observers in Madrid to conclude that he may yet have to govern with what is now a two-year-old budget until the end of the current legislative period in 2027.
