Published on: June 22, 2025 / update from: June 22, 2025 - Author: Konrad Wolfenstein
Sweden's historical upgrade: a turning point in European security policy - financing through borrowing - Image: Xpert.digital
Sweden plans historical defense upgrade for 28 billion euros by 2035
An unprecedented political agreement for national security
Sweden is currently doing one of the most important security policy turns in its modern history. Together with the opposition, the Swedish government parties have agreed to a massive increase in defense spending, which the country will fundamentally transform. This cross -party agreement is remarkable because it comprises all the country's great political forces - from the governing parties to the Social Democrats to the Swedish Democrats, the Left Party, the Center Party and the Greens.
The extent of the planned investments is unprecedented: by 2035, Sweden wants to invest an additional 300 billion crowns in defense, which corresponds to around 28 billion euros. This sum represents the largest military upgrading in the country since the end of the Cold War. Prime Minister Ulf Kristerson described the project as a historical course for the security of Sweden and the entire NATO.
Suitable for:
Financing through borrowing: a new approach
This gigantic upgrade is largely financed by loans, an approach that is also discussed in Germany. The Swedish government plans to record bonds worth 300 billion crowns with a term by 2035. This credit financing is intended as a temporary measure in order to be able to react quickly to the changed security situation.
The debt is limited to a maximum of 300 billion crowns, of which a maximum of 50 billion crowns may be used for investments in civil defense. The Swedish government at the same time emphasized that the debt rate should remain in the long term at 35 percent of gross domestic product to ensure the stability of government finances. Long -term financing is to be gradually introduced by 2035 so that public finances are balanced again.
The new NATO goal: five percent of the gross domestic product
Sweden's upgrading plans are based on the new NATO target requirements that go far beyond the previous two percent goal. The intended new goal stipulates that NATO members will in future spend a total of five percent of their gross domestic product for safety-related expenses. These divide into 3.5 percent for classic defense spending and another 1.5 percent for the associated expenditure such as strengthening civil resilience, cyber defense or military infrastructure.
Sweden is currently around 2.4 percent of his gross domestic product for defense spending. The new target of 3.5 percent is to be achieved by 2030. This dramatic increase reflects the changed threat situation in Europe, especially after the Russian attack war against Ukraine.
The Netherlands have already announced similar plans and also want to reach the five percent goal. Other NATO countries such as Poland and the Baltic countries have already known for this ambitious goal. Poland already leads with defense spending of over four percent of gross domestic product, while the Baltic States of Estonia and Latvia are also far above the previous NATO standard with 3.41 and 3.39 percent.
Suitable for:
- NATO summit in the Haag on June 24th and 25th, 2025: Tensions about defense spending and Trump fears
Sweden's way from neutrality to NATO membership
In order to understand the scope of the current developments, a look at Sweden's security policy history is necessary. The Scandinavian country pursued a policy of armed neutrality for over 200 years. However, this neutrality was never absolutely absolutely - as early as 1948 there were secret agreements with the USA and Great Britain for military cooperation with NATO in the event of a Soviet attack.
During the Cold War, Sweden had impressive military capacities. The country had the fourth largest air force in the world and was able to mobilize up to 850,000 soldiers. Specially produced tanks, fighter jets and submarines of the Swedish armaments industry strengthened the credibility of armed neutrality. At the end of the Cold War, however, the military spending was drastically reduced - from 3.2 percent of gross domestic product in 1988 to only 1.2 percent.
The turning point came with the Russian annexation of the Crimea in 2014, which led to the initial increases in defense spending. The Russian attack war against Ukraine in February 2022 then significantly accelerated Sweden's NATO joining. After almost two years of the accession process, Sweden was admitted to NATO in March 2024.
The changed security situation in Europe
The massive upgrade of Sweden is a direct reaction to the fundamentally changed security situation in Europe. Russia is now classified as the largest conventional threat to Europe. This threat is not only limited to direct military confrontation, but also includes hybrid warfare, cyber attacks and other forms of destabilization.
Prime Minister Kristersson also referred to the uncertainties in transatlantic relations, especially with regard to the policy of US President Donald Trump. These uncertainties would remain for a long time and therefore require stronger European personal responsibility in defense. Trump demands an increase in NATO countries to increase their defense spending to five percent of gross domestic product, while the United States itself spends 3.5 percent.
The threat of Russia already has concrete effects on Swedish defense planning. Parts of the Baltic States are particularly at risk that borders directly on Russia. Modern threats from long -distance weapons and hybrid warfare require completely new defense concepts.
Sweden's defense industry as a strategic advantage
An important factor for Sweden's upgrade plans is the powerful own defense industry. Companies like Saab from play a central role in the European defense landscape. Saab is now a global player with 21,600 employees and serves 100 markets in 30 countries. The company is divided into four main areas: aerospace, dynamics (weapon systems), surveillance (electronic warfare, radars, cybersecurity) and Kockums (submarines and warships).
The Swedish armaments industry has already implemented concrete projects to strengthen defense skills. Sweden and Denmark have jointly ordered 205 CV90 shooter tanks, of which 50 serve as a replacement for vehicles donated to Ukraine. This cooperation shows how the Nordic countries coordinated their defense capacities.
Nordic defense cooperation and European integration
Sweden is part of the Nordic Defense Cooperation (Nordefco), a military alliance of the Northern European States Denmark, Finland, Iceland, Norway and Sweden. This organization aims at increased military cooperation to defend external aggression. Nordefco complements NATO membership and enables closer regional coordination.
Nordic cooperation has proven to be particularly effective, since the countries have similar security policy challenges and have compatible military systems. The defense ministers of the member states regularly meet, with the chair between the countries.
Effects on Ukraine support
An important aspect of Swedish upgrade is increased support for Ukraine. The support provided for 2025 was increased by originally planned 25 to 40 billion crowns (4.3 billion euros). This increase shows that the Swedish armament not only serves its own defense, but also the stabilization of the European security regulations.
The support for Ukraine is part of a wider European strategy that aims to stop Russia's aggression and defend the regular -based international order. Sweden has already delivered considerable amounts of military equipment to Ukraine, including the CV90 shooter tanks mentioned.
Germany in comparison: similar challenges
Germany faces similar challenges such as Sweden when financing increased defense spending. In March 2025, the German Bundestag decided to change the Basic Law that enables loan -financed investments for defense outside the debt brake. For defense and security expenditure, debt brake is exposed to all expenses that go beyond one percent of gross domestic product.
Germany currently only fulfills NATO's two percent goal through the existing 100 billion euro special assets for the Bundeswehr. According to current calculations, the new NATO target requirements for Germany could require annual expenditure of around 3.6 percent of gross domestic product. This would be a three -digit billion -dollar amount and would mean a fundamental realignment of German budgetary policy.
Challenges and risks of credit financing
The loan financing of the upgrading carries both opportunities and risks. On the one hand, it enables it to react quickly to the changed threat situation without shortening other important government spending. On the other hand, it increases public debt and can restrict the financial flexibility of future governments.
Sweden has deliberately set limits for debt and is planning a gradual return to balanced households by 2035. The debt rate should permanently remain with 35 percent of gross domestic product. This self -limitation is intended to receive the trust of the financial markets and ensure long -term financial stability.
Strengthening civil resilience and infrastructure
An important aspect of Swedish upgrade is strengthening civil resilience and infrastructure. The planned 1.5 percent of gross domestic product for wider defense and security-related investments include areas such as civil protection, critical infrastructure and cyber security.
This holistic approach reflects the modern understanding of security that goes far beyond traditional military threats. Strengthening social resilience against hybrid threats, cyber attacks and other forms of destabilization has become a central element of the national security strategy.
International reactions and NATO summit
The Swedish upgrade plans are in the context of the upcoming NATO summit on June 24th and 25th June 2025. At this meeting, the new output targets are to be officially decided. However, not all NATO members support the five percent goal-Spain has already announced resistance.
The different positions of the NATO members reflect the different strategic priorities and financial possibilities. While Eastern European countries and those in the immediate vicinity of Russia support aggressive upgrade, other countries are more reserved.
Suitable for:
A new era of European security
Sweden's historical upgrade marks the beginning of a new era in European security policy. The willingness of the perceived threat shows the willingness to make massive investments in defense and finance them through loans. At the same time, cross -party agreement demonstrates the unity of Swedish politics in existential security issues.
The long -term effects of this development will extend far beyond Sweden. Other European countries are under pressure to make similar efforts. Strengthening European defense skills could lead to a more balanced transatlantic partnership in which Europe assumes more responsibility for its own security.
Defense Minister Pål Jonson summed up the importance of the agreement: she paves the way for historical upgrading the defense that makes Sweden and NATO safer. Now everyone involved would have to do their best to accelerate the upgrade in the coming years. These words summarize the urgency and determination with which Sweden and his allies react to the challenges of the 21st century.
Suitable for:
Hub for security and defense - advice and information
Hub for security and defense - Image: Xpert.digital
The hub for security and defense offers well-founded advice and current information in order to effectively support companies and organizations in strengthening their role in European security and defense policy. In close connection to the SME Connect working group, he promotes small and medium -sized companies (SMEs) in particular that want to further expand their innovative strength and competitiveness in the field of defense. As a central point of contact, the hub creates a decisive bridge between SME and European defense strategy.
Suitable for:
Your dual -use logistics expert
Dual -use logistics expert - Image: Xpert.digital
