- Defence spending in Spain has increased by 107% in the last decade, reaching 19,723 million euros in 2024, with the goal of reaching 2% of GDP by 2029.
- Growing investment offers key opportunities for the technology sector in areas such as artificial intelligence, automation, cybersecurity and secure communication systems.
Investment in Spain
In recent years, Spain’s defence industry has become increasingly important due to the significant increase in military spending. According to recent data, defence investment will reach record levels by 2025, driven both by international commitments and the need to reinforce national security in an increasingly uncertain geopolitical context.
Between 2014 and 2024, Spain has increased its defence spending by €10,215 million, from €9,508 million to €19,723 million, an increase of 107%. Despite this significant budgetary effort, its impact on GDP has been relatively moderate, rising from 0.92% to 1.28%, an increase of only 0.36 percentage points. Nevertheless, the government has stated its intention to further increase defence spending to reach 2 per cent of GDP by 2029, as required by its international NATO partners.
Opportunities for the technology industry
Increased defence investment opens up a range of opportunities for the technology sector, especially in key areas such as digitisation, automation and the development of artificial intelligence systems. Technology companies and startups can find niches in the modernisation of military infrastructure, cybersecurity and advanced component manufacturing.
In addition, the demand for secure communication systems and real-time data analysis platforms is booming, driving collaboration between the defence and technology industries. A clear example of this technological intersection is the commitment to innovation, where the industry allocates 10.7% of its turnover to R&D&I, reflecting its commitment to the development of advanced technologies.
Business consolidation and concentration
The security and defence value chain in Spain is facing a process of business consolidation and concentration to improve efficiency and competitiveness. Although fragmentation remains a problem, public-private collaboration and the integration of small and medium-sized companies with large players can foster greater coordination in strategic projects.
Companies such as Indra have taken the lead in this process, making key acquisitions to strengthen their position as a complex systems integrator. In turn, companies such as Navantia and Urovesa, based in Galicia, are promoting strategic projects that consolidate their role in the naval and aerospace fields. The main challenge remains to balance technological specialisation with the integration of capabilities, without losing specialists in critical technologies.
Challenges and opportunities
However, the increase in military spending also poses significant challenges. One of the main challenges is to ensure transparency in the management of public resources and to balance the development of defence capabilities with investments in other strategic sectors.
The ethics of military technology development is also a crucial issue. The incorporation of artificial intelligence and automation into weapons systems raises questions about the responsible use of these innovations. Technology companies must carefully consider the social and ethical impact of their developments in the military sphere, which, if done correctly, are historically a source of technological progress that ends up having a positive impact on the civilian sector for society as a whole. This was the case with the creation of the internet itself or satellite technology and GPS, which were born in the military and ended up revolutionising society at a global level.
Future prospects for the defence industry
The evolution of the defence industry depends to a large extent on its ability to adapt to rapid technological advances and a changing geopolitical context. As defence budgets increase, so does the pressure to achieve optimal efficiency and ensure that innovations are sustainable and ethical.
Industry will need to work in collaboration with universities, research centres and technology companies to develop solutions that not only improve national security, but also promote an ethical and responsible approach to the use of advanced technologies. In addition, it will be essential to strengthen the supply chain and foster strategic alliances that boost the sector’s competitiveness at a global level, without leaving behind SMEs, which play a key role in economies such as Spain.