Understanding NATO's 5% Defence Spending and Its Strategic Implications for Ireland

In June 2025, NATO leaders agreed to raise defence spending targets to 5% of GDP by 2035, comprising 3.5% for core military capabilities and 1.5% for resilience infrastructure. It’s a generational shift, unlocking hundreds of billions in new annual spending across the alliance. While Ireland is not a NATO member, this shift represents not only a wake-up call but also a once-in-a-generation opportunity.

Why It Matters for Ireland

Ireland currently spends around 0.2% of its GDP on defence, the lowest in Europe. Even with plans to increase this to €1.5 billion by 2028, that would still only bring us to ~0.3%, which is far below the NATO benchmark and well behind peers like Sweden and Finland. The disparity is stark: if Ireland were to match NATO’s 5% target, we’d be spending €20–25 billion a year. While that’s not a realistic goal, the gap highlights just how little has been invested in the tools of sovereignty, resilience, and security.

But here’s the opportunity: Ireland can’t, and shouldn’t, copy-paste another country’s defence model. What we can do is build smart, technology-first solutions that address our unique risks, contribute to European stability, and position Irish innovators at the forefront of a new era in security technology.

Vulnerable — But Perfectly Positioned

We sit on one of the most important digital and geopolitical corridors in the West. Nearly 75% of North Atlantic undersea data cables land in or near Ireland. We’re home to one-third of the EU’s data centres, and Dublin’s internet traffic is growing at a 41% CAGR. These aren’t just economic assets, they’re strategic infrastructure.

And yet, we currently rely on others to defend them. The Naval Service has struggled to maintain a single operational patrol vessel due to crew shortages. The Air Corps has no primary radar or fighter aircraft. And our subsea infrastructure, which underpins everything from cloud storage to global finance, remains largely undefended.

This isn’t just a national security issue, it’s a commercial risk. In a world of hybrid threats and rising geopolitical tension, companies that operate critical infrastructure will seek jurisdictions with credible protection. If we don’t provide it, they’ll go elsewhere.

The Case for Investment and Leadership

Ireland doesn’t need to build a traditional army. But we do need to own our own resilience. That means investing in maritime awareness, primary radar, secure communications, and cyber capabilities and doing so in a way that creates spillover benefits for the economy.

Other small nations have shown what’s possible. Sweden built a world-class aerospace sector around the Gripen fighter. Switzerland is investing in secure communications, drones, and advanced encryption. Finland focused on territorial defence and now enters NATO as a net contributor.

Ireland can do the same but, importantly, play to our strengths: data infrastructure, software, cyber, autonomy, and systems integration. There is no reason Ireland cannot become Europe’s leading hub for dual-use innovation.

Already, Irish companies like MBRYONICS, Ubotica, and VRAI are proving what’s possible with building systems for satellite communications, AI-powered sensing, and immersive defence training. These are businesses we should champion, fund, and scale. And, we should be actively incubating the next wave with both government support and private capital.

A National Imperative and a Strategic Advantage

This is about more than security. It’s about sovereignty, economic competitiveness, and Ireland’s place in a changing Europe. Resilience is now a baseline requirement for governments, for businesses, and for citizens.

Let’s not frame this as a cost. Let’s frame it as an investment in sovereignty, in innovation, and in the foundations of long-term prosperity.

The question isn’t whether Ireland should respond. It’s whether we will lead.

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