Geopolitical trends: Increasing defense spending

As global uncertainty persists, countries are being forced to adapt their national security strategies to the changing geopolitical dynamics.

The latest data from SIPRI’s Trends In World Military Expenditure World report showed that military expenditure rose by 3.7%, to $2.2 trillion in 2022 from the year prior—the highest level ever recorded.

Governments across Europe are also increasingly prioritising their military capacity; of the 36 countries classified as Central and West European, 23 increased spending in 2022.

This is part of a wider push among European NATO members to boost their spending to reach the required 2% of GDP target. Increasingly, the 2% target is being seen as a floor rather than a ceiling. Notably, in 2022 the Polish government committed to raise its military spending to 4% of GDP.

But with this growth of geopolitical tensions happening in the 21st century, cyberspace is also a battlefield. As a result, the global defence cybersecurity market is forecast to reach $33.7 billion by 2028, with a compound annual growth rate of 7.3% over that period.

The new EQM Future of Defence Index captures this global trend, providing exposure to both the hardware and digital components of this growth in defence spending. Uniquely, the index’s methodology ensures that constituents have contracts with NATO or NATO-allied states.

Join our webinar at 3pm BST on May 3 to find out more about the investment opportunity in the ‘Future of Defence’.