Italy’s Defense Market Set for Sustained Growth Through 2035 as Procurement Spending Accelerates

Italy’s defense market is entering a period of sustained expansion, supported by higher military spending, large-scale modernization efforts, and growing investment in advanced technologies, according to a new long-term market assessment covering the 2026-2035 period. The forecast indicates that procurement funding will increase across all military domains as Rome seeks to strengthen operational readiness and industrial capacity amid a changing European security environment. 

The expected growth comes as Italy moves beyond the long-standing 2% NATO spending benchmark. Prime Minister Giorgia Meloni recently announced plans to raise defense and security expenditure significantly, while emphasizing the need to adapt military investments to emerging technologies such as drones, satellite systems, data infrastructure, and digital warfare capabilities. 

A substantial share of future investment is expected to be directed toward equipment acquisition and industrial programs. Italy remains one of Europe’s largest defense producers through national champions such as Leonardo and Fincantieri, both of which are expanding production and technology portfolios to meet rising domestic and export demand. 

The aerospace sector is likely to remain a major beneficiary of increased spending. Italy is a core participant in the Global Combat Air Programme, alongside the United Kingdom and Japan. Earlier this year, the Italian parliament approved nearly €8.8 billion for the program’s initial development phases through 2037, reinforcing Rome’s commitment to next-generation combat aviation and advanced air combat technologies. 

Beyond combat aircraft, digital defense capabilities are expected to receive increasing attention. Leonardo has outlined a strategy focused on artificial intelligence, cybersecurity, advanced computing, and integrated defense networks. The company forecasts continued growth in demand for defense electronics and digital security solutions, reflecting broader trends across European armed forces. 

The naval sector is also positioned for expansion. Fincantieri has linked its long-term business strategy to rising European defense expenditure and plans to increase shipbuilding capacity while expanding its underwater systems portfolio. The company expects defense demand to remain a primary growth driver through the next decade. 

At the policy level, Italy’s defense planning documents already point toward sustained investment. According to U.S. government market assessments, Italy allocated more than $60 billion across its 2025 and 2026 defense planning cycle, with additional funding earmarked for technologically advanced military programs. These resources support procurement, research and development, and industrial modernization initiatives. 

The forecast also reflects broader changes in European defense policy following Russia’s invasion of Ukraine. NATO members are increasing spending commitments, accelerating procurement timelines, and placing greater emphasis on sovereign industrial capabilities. For Italy, this creates opportunities not only for military modernization but also for expanding its role within European defense supply chains and multinational development programs. 

While budget pressures and competing fiscal priorities remain factors, the overall trajectory suggests Italy will remain among Europe’s most significant defense markets through 2035, supported by major procurement programs, industrial investment, and a growing focus on advanced technologies.