Lessons from Europe: Spain is getting serious about defence

Jude Petrie, Client Executive
13/10/2026

As the Russia-Ukraine conflict grinds on, Spain and NATO’s southern flank are not always at the forefront of European defence discussions.

Madrid’s grand boulevards and parks feel removed from turbulence elsewhere in Europe and the Middle East. Yet an economic and security transformation is underway, with consequences for Spain’s military and private sector. This was evident at the Youth Atlantic Treaty Association’s 10th Mediterranean Dialogue in Madrid (6-8 October), which I attended alongside a range of defence and security stakeholders, centred on the theme of “Securing NATO’s Southern Flank in the Air and Space Domains”.

Confidence is growing as Spain assumes a more prominent European economic and political role. Sustained growth has made Spain one of Europe’s strongest-performing major economies, with GDP expanding by 3.7% in 2024 and 2.6% in 2025, outpacing the EU.

Madrid is central to this expansion, attracting international capital, businesses and talent. The region’s economy grew by 4.3% in 2024, while GDP per capita reached €47,220 in 2025, against Spain’s €34,237 average. The capital generates approximately 12.5% of national output with just 7% of the population, attracting over 150 international investment projects in 2025. Growing ties to Latin America further strengthen Madrid’s international standing.

Spain’s economic confidence coincides with rising defence expenditure, driven by Russia’s invasion of Ukraine and NATO pressure. Historically among the Alliance’s lowest spenders, Spain allocated 0.9% of GDP to defence in 2018, rising to approximately 1.3% by 2024. In April 2025, Prime Minister Pedro Sánchez announced an additional €10.47 billion in defence investment, bringing planned expenditure to €33.12 billion, or 2% of GDP.

Despite resisting NATO’s new 5% target for 2035, Spain’s defence expansion presents opportunities for domestic industry and international investors, particularly around Madrid’s defence-industrial ecosystem. Major orders include €7.24 billion for self-propelled artillery, €3.2 billion for F-100 frigate modernisation, and contracts for 100 Airbus helicopters and 18 C295 transport aircraft. Principal beneficiaries include Indra, Airbus and Navantia.

However, opportunities also extend beyond procurement. The expanding definition of security, encompassing energy, technological and societal autonomy, is encouraging public-private collaboration. Spanish energy multinational Moeve is leading domestic production of Sustainable Aviation Fuel (SAF) and Electro-Sustainable Aviation Fuel (E-SAF). These fuels could strengthen Spain’s energy independence, with the country still importing 67% of its energy supply. Government-industry collaboration will be essential to overcoming production constraints and price challenges while fossil fuels remain cheaper but strategically vulnerable.

Space represents another important security domain. Spanish satellite operator Hispasat is strengthening sovereign communications through IRIS², the EU’s secure satellite communications programme. By leading development of the ground segment, Hispasat is enhancing connectivity and European strategic autonomy, demonstrating how private sector expertise can support common security objectives.

Long perceived as economically peripheral and reliant on tourism and traditional industries, Spain is challenging this perception. Investment in defence, emerging technologies and strategic infrastructure, alongside government-industry collaboration, is positioning the country as an important contributor to European security and innovation. This reflects Spain’s ambition to strengthen industrial capabilities, attract investment and shape Europe’s economic and security future.

Challenges remain. Spain’s transformation involves stakeholders with overlapping responsibilities across EU institutions, national and devolved governments, businesses and advisers. Strategic stakeholder engagement is therefore essential for defence and dual-use technology companies pursuing investment and procurement opportunities.

Communications present another issue. Defence remains politically sensitive, requiring companies to navigate public perceptions and competing priorities. Effective communications are critical to building trust, demonstrating the economic and societal benefits of defence investment, and establishing credibility with decision-makers.

Spain’s transformation creates opportunities for UK–Spain collaboration in defence innovation, advanced technologies and industrial partnerships. Converting these into commercial outcomes requires understanding both countries’ political environments, procurement priorities and industrial ecosystems. Companies that identify shared interests, cultivate cross-border relationships and communicate compelling propositions will be best positioned to benefit.

However, Spain’s political landscape is entering uncertainty. Prime Minister Pedro Sánchez’s announcement of a snap general election taking place on 29 November 2026, bringing forward a vote expected in 2027, adds a new dimension to the country’s transformation. Although Sánchez’s focus on the housing crisis could help the PSOE gain enough support to remain in power, there is a sizeable probability of a right-wing government led by the conservative PP with support from far-right party Vox. A PP–Vox government could maintain Spanish military assistance to Ukraine and strengthen domestic defence capabilities, although Vox might push for greater emphasis on peace negotiations rather than expanding military commitments. The outcome of the election and balance of power within any future coalition government could therefore reshape military spending, procurement priorities and Spain’s relationship with NATO and European partners.

So, while the drivers of defence modernisation remain, its political direction could change. For businesses and investors, those who anticipate the shift, build relationships and position themselves early will be best placed to seize opportunities.