Spain Increases Defense Budget by 50 Percent Amid Economic Growth

Spain's Prime Minister Pedro Sánchez has announced a significant increase to the country's defense budget, allocating an additional EUR10 billion. This decision raises the total defense expenditure to approximately EUR30 billion, now accounting for about 1.3% of the nation's GDP. The move responds to pressure from NATO allies, particularly following increased demands for military spending from U.S. leadership.

Sánchez's announcement follows a meeting with NATO Secretary General Mark Rutte, where he was urged to enhance Spain's military engagement. Recently, during a visit to the United States, Spain's Minister of Economy was met with stern discussions regarding military expenditures.

The announcement has not been without controversy; five out of the twenty-two members of Sánchez's cabinet expressed their dissent regarding this decision, which was made unilaterally and without broader consensus, including from the opposition and coalition partners. Critics, including members of the leftist coalition, have labeled the increase as "exorbitant" and "inconsistent." This response is indicative of the internal strife within Sánchez's government, particularly as the left struggles to maintain its political footing in light of recent polling that shows diminishing support compared to the previous parliamentary elections in 2023.

Despite the pushback, leftist leaders, like Second Deputy Prime Minister Yolanda Díaz, have been cautious in their criticism, aware that a rupture with Sánchez's Socialist Party (PSOE) could spell political disaster for their coalition. As a result, Díaz refrained from vocal opposition during the cabinet meeting where the defense spending increase was approved.

Another layer of complexity arises from the fact that since 2023, Sánchez's minority government has been governing without formal budget approvals from Congress, limiting parliamentary input and avoiding direct confrontation with coalition allies. Additionally, various regional parties, such as the Catalan ERC, have also voiced concerns regarding military spending.

On the other hand, the conservative opposition has called for even greater military spending, suggesting that defense expenditures should rise to 3% of GDP and urging Sánchez to present a new budget for parliamentary approval. By opting to increase defense spending through executive decision, Sánchez sidesteps potential conflict within the current political landscape.

Amid the controversy surrounding military funding, Spain's economy continues to thrive, showing robust growth. The Spanish central bank president José Luis Escrivá recently highlighted this economic prosperity, while international assessments from outlets like The Economist have ranked Spain as the top economy in the world. The International Monetary Fund has revised its growth forecasts, noting that Spain is the only industrialized nation expected to see growth in the coming period.

With immigration and tourism driving economic success, Spain anticipates a record 100 million visitors this year, generating around EUR140 billion in revenue. Furthermore, there has been a notable shift in employment, with more Spaniards now engaged in sectors like science, education, and technology than in the traditional tourism and hospitality industries.