Around the globe, growth has been slowing, trade and investment have been falling, and now, escalating Middle East tensions are shaking up markets.
But governments across Europe and in Britain face an additional economic stress — significantly raising military spending. These peacetime economies have to figure out how to deter Russia, a belligerent foe that is already on a wartime footing and spending an estimated 7.5 percent of its national income on its military.
The debate has intensified in the run-up to the North Atlantic Treaty Organization’s annual summit meeting this week at The Hague, where the security alliance will set new spending goals. President Trump has demanded that the other 31 NATO members devote 5 percent of their total economic output to defense, up from the current 2 percent target. He has also made clear that the United States will reduce its financial and troop commitments, though it is unclear by how much.
This is a “global reset,” Lt. Gen. Sean Clancy, the new chief of the European Union’s military committee, said at a security conference in Brussels this month. But “we haven’t even defined what the transition looks like.”
Money, though, is far from the only issue Europe confronts now that it has reluctantly accepted the reality that it must be able to protect itself without help from the United States.
Formidable political, strategic and regulatory hurdles remain.
E.U. leaders must maintain public support for common military spending and joint weapons procurement, even as right-wing nationalist sentiments oppose giving the bloc more power.
And the farther from the Russian border, the less urgent the threat feels. Poland, for instance, is already spending nearly 5 percent of its gross domestic product on defense while Spain dedicated just 1.3 percent last year.
The European Union and Britain must also figure out how to prepare for the new kind of war that Russian aggression presents.
Since the fall of the Soviet Union, Europe’s military has been focused on deploying troops to hot spots like Afghanistan and Iraq. Now they must be able to defend their own territory. Intelligence officials warn that Russian forces could be ready to attack a NATO country in five years.
Complicating the decision making are rapid advancements in intelligence, surveillance, battlefield management and cyber technologies.
Warfare is undergoing a transformation that is akin to what occurred during World War I, when horse-drawn wagons, muskets and swords were replaced by tanks, machine guns and airplanes.
Look at Ukraine’s battlefields. They are dominated by new technologies and throwback strategies, millions of drones and muddy trenches.
“Today 80 percent of targets in Ukraine are destroyed by drones,” said Andrius Kubilius, European Commissioner for defense and space. “Every two months, there is a need for radical innovation of the drones in operation.”
In recognition, the British Defense Ministry announced this month a startling overhaul of its warfighting approach, moving away from the Cold War-era focus on heavy armor and mechanized infantry. Under the plan, 80 percent of combat capability will rely on remote-controlled, reusable ground vehicles and drones as well as missiles, shells and self-destructing drones.
The European Union has also taken steps to revise its strategy. In March, the 27 member nations issued a blueprint for combat readiness by 2030. Last month, the European Union created a 150 billion euro program allowing joint investments in security. (Twenty-three countries are members of both the European Union and NATO.)
But higgledy-piggledy rules and practices still hamper efforts to rapidly turn Europe’s fragmented defenses into a unified and efficient fighting force. Joint financing is more the exception than the rule. Red tape, lack of coordination and slow decision making across the continent are causing delays, supply shortages, waste and duplication, according to political and industry leaders.
Overall strategy and standards are set by NATO commanders, but military budgets, specifications, quality control, export licenses, purchasing and planning are handled by individual nations.
The result is that a German-made component going into a French-made plane needs a separate export certification that can delay delivery by months. And though 12 European countries use NH90 helicopters, there are 17 versions, said Camille Grand, a former senior NATO official who leads defense studies at the European Council on Foreign Relations.
Europe is also looking to decrease its dependence on American weaponry. The share of military equipment supplied to the European members of NATO by the United States has grown to nearly two-thirds, from about half less than a decade ago, according to a report by the Stockholm International Peace Research Institute.
Europe has put a priority on investment in its own defense industry and is looking to make its supply chains for key materials, like gunpowder, more resilient.
“There is an adjustment in terms of the business model for the European defense industry,” Mr. Grand said, as it shifts to standardized mass production. That, he said, will require more consolidation to create economies of scale and joint procurement.
Industry leaders, meanwhile, complain that they cannot invest in expanded production and research without more direction from government officials.
“The political machinery is slow,” said Jan Pie, secretary general of ASD, a trade group that represents 4,000 companies across Europe. “So it’s difficult to scale up.”
Environmental approvals needed before a new weapons factory may be built can take up to five years, Mr. Pie said. He said that despite the talk about the need for urgency, the defense industry was not given priority in times of shortages. Nammo, a Norwegian ammunitions manufacturer that supplies Ukraine, for instance, was unable to ramp up production in 2023 because a nearby TikTok data center had already bought up the region’s surplus electricity.
As economies slow across Europe, budget battles are expected to continue to soak up the spotlight. It’s doubtful that some countries will ever reach the 5 percent target. Still, as far as funding goes, Europe has turned a corner, several European leaders and military experts said.
“There’s a lot of discussion about numbers, percentages, financing,” Nadia Calviño, president of the European Investment Bank, the European Union’s lending arm, said in Brussels last week. “But I want to be very clear: Europe is a rich continent, and we can mobilize the necessary financing.”
Hugues Lavandier, who leads McKinsey & Company’s aerospace and defense unit in Europe, agreed that “to some extent, the budgetary debates and the spending debates are behind us.”
NATO’s European members have doubled military spending since 2016, he said. By the end of the decade, they will be spending 800 billion to 1 trillion euros on defense equipment and related infrastructure.
“That’s a staggering amount,” he said. Now, “the question is: How do you translate all of that funding into actual capabilities?”
Patricia Cohen writes about global economics for The Times and is based in London.
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