The upcoming NATO summit is expected to focus overwhelmingly on one key issue: how far member countries have progressed—or plan to progress—toward the target of raising defense spending to 5% of GDP by 2035. This is not a mere theoretical or rhetorical discussion. In today’s economic context, that target heavily shapes fiscal policy across European nations—perhaps even more than the European Commission’s updated Stability Programme.
A Shift Toward a ‘War Economy’
The reason is straightforward. Permanently allocating resources equivalent to 5% of GDP toward military equipment—roughly €10–12 billion annually for Greece—means diverting public funds away from social and productive investments and into non-productive, destructive expenditure. This reallocation is what analysts mean by the term “turn toward a war economy,” a trend already underway in several Eurozone countries.
This shift must occur amid worsening economic conditions: the European economy is slipping deeper into a phase of slowing investment returns and rising stagflationary risks—especially when compared with the U.S. and other globally competitive regions. In short, it’s becoming harder to grow GDP—the very source from which defense budgets must be drawn.
Spain’s Contrasting Path
Amid this backdrop, one Eurozone country is moving decisively in the opposite direction—and making no secret of it. Its approach has drawn attention from major U.S. media outlets, which highlight Spain’s projected 2.6% GDP growth this year—a rate comparable to some of the most dynamic Asian economies driven by technology, despite Spain lacking a similar tech or export-oriented profile. Its core exports remain industrial goods, agri-food products, and services.
What explains this divergence from the rest of the EU? According to U.S. reporting, the real engine behind Spain’s growth is demographic. The country’s population has surged from 36 million to nearly 50 million over the past 50 years—the largest percentage increase among the EU’s five largest economies. Much of this growth stems from labor migration, with Madrid pursuing a policy starkly at odds with prevailing European trends: rather than deporting undocumented migrants, Spain carried out a large-scale regularization drive, granting residence permits to over one million people without formal documentation.
The result has been striking: approximately 80% of net employment growth since 2022 has come from foreign-born workers.