The increase in European military spending is already having consequences for the Spanish industry. Since 2025, Spain has accelerated its defense investment decisions to levels significantly higher than those recorded over the previous decade, a process linked to the deteriorating geopolitical landscape, the war in Ukraine, and commitments made within NATO.
The report A Snapshot of Defense Spending in Spain, prepared by BBVA Research, estimates that the average annual expenditure decisions related to defense will amount to nearly 3.75 billion euros between mid-2025 and June 2026. This figure represents a considerable difference compared to the approximately 730 million euros per year recorded on average from 2013 to 2024. The amount has therefore multiplied by more than five.
The acceleration was particularly intense during 2025. The decisions approved by the Council of Ministers mobilized an average amount close to 4.75 billion euros that year, with a significant concentration during the second half. BBVA Research interprets this evolution as part of a comprehensive modernization process of the Armed Forces and considers that the data points to a structural change in Spanish defense policy.
From Budget Increase to Industry
Spain reached its target of dedicating 2% of GDP to defense in 2025, in accordance with NATO’s methodology. Maintaining that level in the coming years will require, as BBVA Research warns, budget continuity and sustained effort; thus, the current increase in investment should not be viewed solely as a series of extraordinary programs.
The allocation of new investments also allows for an observation of how military needs are changing. Resources are particularly focused on weapon systems and ammunition, air capabilities, infrastructure, cyber defense, and research and development. Since 2022, the importance of software and communications within contracting has also increased, reflecting the growing technological and digital component of defense systems.
The evolution is also evident in the tenders. Until June 2026, the amount awarded stabilized around 200 million euros per month, below the nearly 300 million per month recorded during the second half of 2025, excluding December. Supplies account for approximately 65% of contracts, compared to 30% for services and 5% for works.
The data thus shows an increase in resources that directly affects business activity. However, this growth is not distributed evenly among Spanish companies.
Large Contracts Concentrated in Few Companies
BBVA Research highlights a characteristic of the new cycle as the high concentration of contracts. Major industrial groups absorb a significant portion of the awarded amounts, especially when analyzing large programs related to weapon systems and military platforms.
The most evident example occurred in December 2025. Indra Sistemas led the awards, followed by Airbus Helicopters Spain, Escribano Mechanical & Engineering, and Airbus Defence and Space. Among the companies with less weight are TAI, Telefónica, Uro Special Vehicles, Santa Bárbara Sistemas, Cipherbit, and Epicom.
Approximately 75% of the amount awarded that month was related to weapon systems, helicopters, and airplanes and was concentrated in a small group of mostly national companies.
This distribution largely reflects the characteristics of the industry itself. Major defense programs require engineering capabilities, technological integration, manufacturing, maintenance, and certification that are concentrated within a limited number of business groups. At the same time, increased spending opens up opportunities for specialized companies able to join as suppliers to these programs.
An Industrial Map Concentrated by Region
The concentration is not only among companies. BBVA Research’s analysis identifies Madrid, Albacete, Asturias, and Seville as key hubs related to defense contracting.
The territorial distribution does not depend on where the public bodies awarding the contracts are located, but rather on the location of industrial capabilities. Design, manufacturing, system integration, and maintenance explain why certain provinces concentrate a significant portion of the activity.
The resulting map also reflects the specialization of the Spanish industry. National companies have a relevant presence in land and maritime segments, while the aerospace sector presents a greater degree of international cooperation due to Spain’s involvement in multinational programs like the Eurofighter.
The increase in military spending in Europe is also benefiting Spanish defense exports. Aeronautical capabilities account for a significant portion of these sales, with Germany, France, and Italy among the main destinations within the European Union.
An Industry Facing a Growth Cycle
The data analyzed by BBVA Research indicates that the Spanish defense industry is entering a phase different from the previous decade. The change does not stem solely from the increase in the Spanish budget. The need to recover military capabilities and replenish equipment is boosting demand across much of Europe, while the war in Ukraine has accelerated investments that had remained at lower levels for years.
The economic effect will depend on the duration of this cycle and how the investment is distributed among large contractors, specialized companies, and supply chains. The concentration detected by BBVA Research shows that a substantial portion of large awards ends up with a small number of companies, but the growth of programs related to software, communications, cybersecurity, ammunition, and R&D also expands the technological fields linked to defense.
For regions with companies capable of integrating into these industrial chains, the evolution of military spending could have consequences that extend beyond the Ministry’s own budgets. The new cycle of Defense is also becoming a cycle of industrial and technological investment, whose business and territorial distribution will be one of the aspects to watch over the coming years.
