The European Commission reported €14.8 billion in first-half disbursements from two borrowing-backed programs for national defense plans and Ukraine, as European institutions consider ways to address defense-financing constraints.
The Commission’s report for Jan. 1 through June 30 says it raised €99.5 billion through six bond syndications and six auctions. The bonds had an average maturity of about 11.5 years. The Commission disbursed €7.7 billion in Security Action for Europe (SAFE) pre-financing to Poland, Cyprus and Lithuania, and €7.1 billion under the Ukraine Support Loan.
SAFE makes up to €150 billion in loans available to EU member states for defense investment. The Council of the European Union says recipient governments must repay the loans. The program encourages joint procurement and limits to 35% the share of component costs sourced outside the EU, Ukraine, the European Economic Area and the European Free Trade Association.
The €90 billion Ukraine Support Loan covers 2026 and 2027. EU leaders agreed to it in December 2025, and the Council finalized its legislation on April 23, 2026. The loan allocates €30 billion for macroeconomic support and €60 billion for defense-industrial capacity, including procurement. The EU will borrow on capital markets, with the loan backed by EU budget headroom. The Council designated reparations due from Russia as the planned repayment source. It said €45 billion should be made accessible in 2026, including €28.3 billion for defense-industrial capacity.
Defense expenditure by the EU’s 27 member states reached €418 billion in 2025, or 2.2% of the bloc’s gross domestic product. The European Defence Agency and the Council estimate it will reach €454 billion, or 2.4% of GDP, in 2026, measured in constant 2025 prices. European Defence Agency Chief Executive André Denk said member states were making “unprecedented investments in defence.”
The European Parliament Research Service said national budgets face competing demands, private-sector interest in defense financing is limited, and a lack of scale constrains investment. It described further financing mechanisms as under consideration.
The EU has a recent precedent for joint borrowing: in 2020, leaders authorized up to €750 billion in borrowing, in 2018 prices, for the NextGenerationEU recovery effort tied to the COVID-19 crisis. Separately, NATO allies’ 2025 commitment sets a 2035 annual spending target of 5% of GDP, with at least 3.5% for core defense and up to 1.5% for broader security needs. The alliance is due to review the commitment in 2029.
