Defence investments create new jobs in Sweden is now a central topic as increasing investments in both military and civilian defence are expected to have substantial effects on the Swedish economy. After decades of underinvestment, Europe is seeing a historic build-up of defence and security capabilities. Several European countries are moving toward targets that could allocate up to 5 percent of GDP to defence and security.
An analysis by EY indicates that if Sweden raises defence spending to 3.5 percent of GDP, such investments could help create roughly 48,000 new jobs by 2035. At the same time, annual revenues in Swedish industry are estimated to increase by around SEK 110 billion per year compared with today’s levels.
A historic rearmament of Europe’s defence and security
Europe’s defence and security sector today is marked by low readiness, fragmented supply chains, outdated technology and vulnerable critical infrastructure. According to EY-Parthenon, these conditions are the result of prolonged underinvestment.
In 2024, combined defence spending among the Nordic countries corresponded to approximately 2.3 percent of GDP. In response to a more unstable security environment, NATO members in Europe are now moving toward an ambition of 5 percent of GDP for defence and security, where around 3.5 percent would be for direct military spending and the remainder for broader security and infrastructure investments aligned with NATO priorities.
The geopolitical situation has made it clear that military capabilities must be strengthened quickly while also scaling up defence-related capacities and value chains across Europe.
Demand growth far beyond the defence industry
In Sweden, a 3.5 percent scenario is expected to generate annual revenues of about SEK 320 billion through 2035, implying an increase of roughly SEK 110 billion per year versus today’s level.
Much of the growth is likely to occur outside the traditional defence sector. Sectors such as technology, energy and utilities, construction and civil engineering, logistics, manufacturing, and a wide range of professional and service businesses are expected to benefit significantly from increased investment.
This development will also place higher demands on digitalisation, innovation and IT systems across both public and private organisations. Defence and security investments drive a need for new solutions in data management, cybersecurity, cloud services and protection of critical infrastructure.
Strong collaboration between the defence sector and an active business community is essential. Leveraging civilian market experience and skills is a prerequisite for ensuring the transformation is robust and sustainable and that Sweden can scale up its capabilities at the necessary pace, says Fredrik Sjöström, partner and Head of National Security and Defence at EY Sweden.
Significant labour market effects
Defence and security investments could help create about 48,000 new jobs in Sweden compared with current levels. From a Nordic perspective, a corresponding modernisation of defence and adjacent industrial structures could generate up to 130,000 new jobs across the region.
The expansion is not driven solely by traditional military needs. Hybrid threats, cyber risks and the requirement to protect both digital and physical infrastructure mean demand will span multiple sectors and require enhanced cooperation between companies, industries and countries.
As demand rises across many parts of the economy, pressure on skills supply will grow. To realise the full potential of these investments, both the state and the private sector must work long term to secure access to the right expertise, says Fredrik Sjöström.
About the analysis
The analysis “Implications of Defence and Security Spending Across Sectors” was produced by EY Parthenon to highlight the economic opportunities generated by increased defence spending in the Nordic countries. Its purpose is to illustrate how investments can generate revenues and jobs not only within the defence sector but across the wider economy.
The analysis draws on external sources such as SIPRI and the World Bank and was compiled in December 2025.