Public money is back: Europe's €13.5 billion space budget and the defence surge

The one chart that matters: Europe up, world down

Global institutional space budgets reached €119 billion in 2025 — a 3% decline and the end of a decade of double-digit growth, mostly due to a dip in US defence spending and flat NASA funding. Europe went the opposite direction: its consolidated space budget (national programmes, ESA, EUMETSAT and the EU space programme) rose 12% to €13.5 billion, lifting Europe's share of global public space funding from 10% to 11% (ESA Report on the Space Economy 2026).

The driver was not science budgets. The report is explicit: "the growth was primarily driven by increased national defence budgets, largely led by Germany."

The defence surge, in numbers

2025 was the eleventh consecutive year of rising global military expenditure — $2.9 trillion, or 2.5% of world GDP, the highest share since 2009 (ESA, 2026, citing SIPRI). Space is riding that wave:

• 53% of global space budgets went to defence in 2025 — more than civil for the third year running.
• The defence-related upstream market (satellites and launch bought by military customers) grew 26% to €32 billion.
• ESA projects government space budgets to increase by more than 20% in one year from 2026 onward, primarily on defence programmes — helped in the US by the Golden Dome programme, with roughly $24 billion already approved.

Europe's low base is Europe's opportunity

Here is the asymmetry that matters for anyone selling into this market. In 2025, defence accounted for 67% of the US space budget and 53% globally — but only 16% of Europe's. Over the past decade Europe generated just 4% of global demand for defence satellites (ESA, 2026). Europe is, in short, under-invested in space defence by every comparative measure.

That is changing fast:

• Germany adopted a €35 billion investment plan for space security and defence by 2030 — hardened satellite systems, orbital surveillance, and a military satellite operations centre.
• France presented its National Space Strategy 2025–2040 in November 2025, adding €4.2 billion for military space activities in 2026–2040.
• Early-warning capability — long a European gap — is being built through projects like JEWEL (Joint Early Warning for a European Lookout) and Odin's Eye.
• ESA is institutionalising the shift with its European Resilience from Space (ERS) programme, tying Earth observation, telecoms and navigation directly to Europe's security needs and positioning systems for dual-use.

Where the tenders will appear

Budget lines become procurement with a lag of quarters, not years. Based on the programmes named in the report, four streams are worth tracking from 2026:

1. ESA security and dual-use calls under ERS and related programmes — expect Earth observation, secure connectivity and space situational awareness work packages.
2. German national procurement flowing from the €35B plan: hardened satcom, orbital surveillance, ground segment and operations tooling.
3. French military space under the 2025–2040 strategy — asset protection, resilience, early warning.
4. EU-level programmes where dual-use is the design principle (IRIS², GOVSATCOM evolutions, and Horizon Europe security topics).

SMEs do not need to become defence primes to participate. The report notes the OECD's two conditions for defence spending to produce durable growth: procurement efficiency and cross-border cooperation — both of which push agencies toward broader, more startup-accessible supply chains.

What to do about it

1. Position as dual-use now. If your EO, comms, PNT or SSA capability has a security-relevant framing, write it into your materials before the calls open, not after.
2. Track the calls systematically. The window between publication and deadline is often 6–10 weeks. VIRA monitors ESA and EU tenders daily and matches them to your profile.
3. Use the macro numbers in your proposals. "European institutional space budgets grew 12% in 2025 and defence-driven growth of 20%+ is projected from 2026 (ESA Report on the Space Economy 2026)" is exactly the kind of market evidence evaluators reward.
4. Read the companion pieces. The overall 2025 picture is in our key-numbers breakdown, and the private-capital side in the European investment analysis.

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