NATO Seeks Private Capital Boost as Defence Spending Reaches Record Levels
NATO is calling on banks, investment firms and other financial institutions to increase funding for the defence sector, arguing that government budgets alone will not be enough to expand military production and support emerging security requirements.
The Alliance launched its “Call to Action” for financial institutions during the NATO Summit Defence Industry Forum in Ankara on Tuesday. NATO said the initiative is designed to encourage greater private investment in defence, security and resilience projects, while Allied governments work to strengthen domestic financing mechanisms and develop public-private investment models.
NATO Secretary General Mark Rutte said defence industries need access to more capital to increase production capacity and accelerate innovation.
“To keep our defences strong, we need to sustain and scale our industries and fuel innovation across the defence sector. And for this, we need capital,” Rutte said during the forum. He added that while private investment in defence has grown, “it’s not nearly enough.”
The announcement comes as governments around the world increase defence spending in response to rising geopolitical tensions, military modernisation programmes and concerns over supply-chain resilience.
According to the Stockholm International Peace Research Institute, global military expenditure reached a record level of approximately $2.7 trillion in 2024, with spending rising across several regions.
SIPRI attributed the increase to factors including the war in Ukraine, heightened strategic competition and expanded military requirements among states.
Europe has been a major driver of recent defence spending growth, with NATO members increasing investment in areas such as ammunition production, air defence, military infrastructure and advanced technologies. The United States remains the largest military spender globally, while China continues to expand its defence capabilities as part of a long-term military modernisation effort.
NATO’s latest initiative reflects a growing focus on the role of private finance in defence development. The Alliance argues that increased access to investment is needed not only for traditional military equipment but also for newer areas such as artificial intelligence, cyber defence, autonomous systems and advanced communications.
Several major financial institutions have backed the initiative, including Banco Santander, Barclays, BNP Paribas, Citigroup, Deutsche Bank, NatWest Group, PKO Bank Polski, Danske Bank, the Business Development Bank of Canada and the NATO Innovation Fund.
NATO said these institutions have already mobilised around $217 billion in capital for defence and security-related activities. The Secretary General described the announcement as the start of a broader effort to deepen cooperation between the Alliance and the financial sector.
The push reflects a wider challenge facing defence industries: although governments are increasing budgets, companies need additional financing to expand factories, secure supply chains and develop new technologies. Defence manufacturers in Europe and North America have faced pressure to increase output following increased demand for weapons systems and military equipment.
For NATO, the issue is not only how much countries spend on defence, but how quickly that spending can be converted into operational capability. The Alliance’s appeal to private investors marks an effort to bring financial markets closer to defence planning as security competition continues to intensify.
