Spain’s defense expenditure has risen incrementally, growing from US$9.8bn in 2017 to US$13.3bn in 2021 at a compound annual growth rate (CAGR) of 7.95% and is set to reach US$18.3bn by 2026, according to GlobalData, a leading data and analytics company. The country is committed to service-wide platform modernization to keep pace with NATO inter-operability and the rise of hybrid threats in the security landscape.

GlobalData’s latest report, ‘Spain Defense Market – Attractiveness, Competitive Landscape and Forecasts to 2026’, notes that Spain has been heavily impacted by the COVID-19 pandemic and is projected to be one of the slowest countries to recover. However, spending on defense expenditure will increase as hybrid threats become more common.

Spain’s national budget was in deadlock for more than two years, which resulted in the country’s defense spending for FY2020 and FY2019 being based on the 2018 General State Budget. However, the 2021 budget was passed in the lower house and fast tracked for approval in the Senate.

The 2020 National Defense Directive acknowledges the changing geopolitical scenario such as rising strategic competition between great powers (US, Russia, China) and the changing security landscape as hybrid threats become more common, especially in cyberattacks and disinformation. Future defense expenditure will be centred on research and development, according to the Special Armament and the Special Modernization programs.

Vera Lin, Associate Aerospace and Defense Analyst at GlobalData, comments: “Spain’s budget allocation for acquisitions is anticipated to increase from US$3.2bn in 2022 to US$4.3bn in 2026. Spain has injected a sizeable increase in acquisitions in 2021, allotting US$3.2bn and achieving 9.81% CAGR over the 2017-2021 period. In comparison to NATO military expenditure, Spain is one of the lowest defense spenders and it is unlikely that expenditure will reach 2% GDP by 2026 as it is currently at 0.94% GDP share.

“Key acquisition programs that have driven expenditure increases include the Eurofighter aircrafts, Future Combat Air System, A-400M transport aircraft, S-80 class submarine, the Dragon-Wheeled Combat Vehicle, NH90 tactical transport helicopter, CH-47D Chinook helicopter upgrades, the F-110 frigates and the Meteoro-class offshore patrol vessels. However, the funding injection for acquisition programs is markedly lower than the defense spending when compared to NATO members, such as France and Germany, and demonstrates a financing gap between highest and lowest spenders to fulfil defense modernization policy expectations.”