Greece’s defence-to-GDP ratio ranked among the highest in the euro area in 2025, with military expenditure equal to about 2.4% of gross domestic product under European Commission data cited by the European Central Bank.
Separate figures from the Stockholm International Peace Research Institute put Greece’s military spending at $8.4 billion in 2025, up 5.6% in real terms from a year earlier.
Only Estonia, Latvia and Lithuania ranked above Greece in the ECB comparison, placing the country fourth among 21 euro-area members measured under the Classification of the Functions of Government, or COFOG, system.
Philip R. Lane, a member of the ECB’s Executive Board, presented the figures at the EEA-ESEM Annual Meetings in Dublin on Aug. 17. His presentation examined the effects of Europe’s expanding defense budgets.
Greece stands near the top of euro-area spending
Estonia recorded the highest defense spending as a share of GDP in 2025, followed by Latvia and Lithuania. Greece came next, ahead of Slovakia, France, Germany, Italy and Spain.
The ECB presentation also compares the European Commission figures with NATO estimates. Accounting methods differ, but both measures place Greece among the euro area’s heavier defense spenders.
Greece has also remained among NATO’s leading defense spenders relative to GDP, noting in 2025 that the country ranked fifth in the alliance by that measure.
Greece ranked fourth in the euro area for defense spending as a share of GDP in 2025, at about 2.4%, according to European Commission data presented by the ECB.
The country remains one of the bloc’s biggest defense spenders relative to the size of its economy. pic.twitter.com/OCMFK8KYnY
— Tom Marvolo Riddle (@tom_riddle2025) August 19, 2026
Greece’s position is important because of its public debt. In a separate ECB comparison, the country falls into the high-debt group, defined as governments with debt above 100% of GDP. The country is also projected to remain among the world’s most indebted economies in 2026. That gives Athens less fiscal room for major spending increases.
The EU fiscal framework offers additional flexibility for defense spending to countries that activate the national escape clause, equivalent to as much as 1.5% of GDP from 2025 to 2028. Greece moved to seek that fiscal leeway as it pursued a multiyear military modernization program.
Economic benefits depend on how money is spent
The ECB said higher defense spending can support growth, but the benefit depends on how governments use the money.
Its models suggest that investment in equipment, infrastructure and other capital projects can have a stronger effect on GDP than routine government consumption. Public investment can also support household consumption and business investment.
The boost becomes smaller when governments rely heavily on imported military goods because more demand flows abroad. Expectations of future tax increases or tighter monetary policy can also weaken the effect.
Historical evidence covering all 27 EU countries from 1999 to 2025 suggests that increased defense spending can lift GDP over several years while also putting some upward pressure on prices. The ECB cautioned that estimates vary with economic conditions, import reliance and the type of expenditure.
High debt adds pressure for Greece
For Greece, the findings underline a difficult balance. The country already has one of the euro area’s highest defense-to-GDP ratios while carrying high public debt.
At the same time, Athens has continued efforts to reduce its debt burden, including plans to repay about €13 billion ($15 billion) in bailout-era debt early.
The economic payoff from higher defense spending will depend on whether additional outlays support production and longer-term growth.
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