Introduction
According to the latest report from the Stockholm International Peace Research Institute (SIPRI), global military spending reached US$2.86 trillion in 2025, up 29.3% from 2022, when Russia launched its full-scale military operation in Ukraine.
European defence spending has followed this trend. Excluding Ukraine and Russia, the continent’s total military expenditure rose by 70.8% over the same period, from US$344 billion in 2022 to US$588 billion in 2025 (current US dollars).
Such figures are often taken as evidence of equivalent increases in military capability. Yet expenditure alone is not a reliable indicator of a state’s military power. If supply and production capacity cannot meet rising demand, additional spending drives up prices rather than outputs.
This article examines that problem through the 155mm artillery shell, a core munition for many modern militaries, using the UK, one of Europe’s largest defence spenders, as the example. It traces the rise in shell prices since 2022 and poses a simple hypothetical: how many shells could the UK’s entire defence budget buy in 2022 versus 2025?
The article shows how rising costs and constrained production capacity erode the purchasing power of any defence budget, with consequences for deterrence and warfighting credibility.
A Surge in Defence Spending
At the NATO Hague Summit in June 2025, member states agreed to invest 5% of GDP annually in defence by 2035, including at least 3.5% on core defence (i.e. personnel, equipment, operations, and maintenance). This is a significant increase from the 2% of GDP baseline set at Wales in 2014.
Spending at a national level reflects this commitment. Between 2022 and 2025, Germany’s defence expenditure rose by 102.4%, the Netherlands’ by 112.3%, and Poland’s by 204.9%. UK spending dipped slightly in 2025 but remains 39% above its 2022 level (author’s calculations based on SIPRI data, all in current US dollars).
Higher spending, however, does not automatically translate into greater capability. UK Defence Secretary Wes Streeting stated in October 2026 that “Defence spending is the measure of our commitment. Defence capability is the measure of our credibility.” His speech acknowledged that innovation alone means little if weapons cannot be manufactured at scale.
Rising demand, rising prices – 155mm artillery
Artillery has been indispensable on the battlefield in Ukraine. Early in the war, some estimates put daily consumption as high as 12,000 shells for Ukraine and 70,000 for Russia (all calibres). Although firing rates have since fallen, at that early peak this would amount to almost 30 million rounds fired per year.
Western industry is not built for that scale. Rheinmetall, one of Europe’s largest defence primes, produced around 100,000 shells per year before the war and aims to produce 1.1 million shells a year by 2027. That is a significant increase, but it equates to only a little over three months of Ukraine’s peak firing rate.
The US is also struggling to scale. According to an Inspector General assessment for the Department of War, the Army targeted 100,000 shells a month by October 2025, but was only producing about 36,000 in March 2026 with the shortfall attributed to difficulty producing projectile metal parts to specifications at a new facility.
A 155mm shell depends on a network of interdependent industries, from specialist steelworking and precision machining to energetic materials, propellant production and final assembly. Even basic inputs can become bottlenecks: the US has had no domestic source of Trinitrotoluene (TNT), the shell’s main explosive, since 1986, and only contracted a new plant in November 2024.
With Ukraine’s demand for heavy artillery and allies’ efforts to rebuild their stockpiles at the same time, supply has struggled to adjust quickly enough, and prices have risen. For instance, according to Admiral Rob Bauer, a 155mm shell that would have cost around $2,000 before the war now costs closer to $8,000, a 300% increase in price.
The implication of rising costs for defence capability
The significance of increasing prices is that they erode a defence budget’s purchasing power – i.e. what the money can actually buy, calculated as the budget divided by unit price.
For heavy artillery, that unit price depends on whether supply can keep pace with demand. The supply (the number of shells that can be produced) is determined by industrial capacity. This includes the number of existing plants capable of manufacture, availability of skilled labour, and sourcing and supply of the components required for each shell.
However, when multiple buyers compete for the same limited supply, the result is “demand pull” inflation, where too much money chases too few goods. This causes prices to rise throughout the supply chain as suppliers compete for the same inputs, pushing overall production costs up. The result is a potential mismatch between the nominal growth of defence budgets and the real growth of military capability.
This is best illustrated through a simple hypothetical. Suppose the UK spent its entire defence budget on 155mm shells. In 2022, the UK’s defence budget of US$64 billion would have bought roughly 32 million shells at $2,000 per unit. In 2025, a budget 39% larger, at US$89 billion, buys around 11 million shells at $8,000 – around 21 million fewer shells.
The calculation here is only intended as illustrative, not a measure of the UK’s actual ammunition holdings. It isolates the effect of rising unit prices on defence capability, showing that while the budget rose 39%, the number of shells it could theoretically purchase fell by around 65%.
The UK’s loss of purchasing power becomes clearer when compared with Russia, whose declared budget of around US$190 billion is about twice the UK’s. Yet, at an estimated US$1,250 for the Russian equivalent 152mm, the same experiment yields about 152 million shells, roughly 14 times the UK’s figure. This measures relative purchasing power, not Russia’s actual shell output, which is of course far lower – around 3.4 million rounds for all howitzer calibres in 2025.
Russia’s ability to manufacture ammunition at substantially lower unit cost likely reflects an industrial system geared towards high-volume output, built over years of investment. By comparison, Western manufacturers are now facing the challenge of expanding production from an industrial base built for peacetime.
Conclusion
The UK case shows what happens when budgets rise faster than industry can expand. Although the defence budget is 39% larger now, this would buy about two-thirds fewer shells, because prices have risen faster than the budget. Russia could theoretically buy around 14 times as many shells, largely because its production base manufactures them at a far lower unit cost.
The lesson here applies to any country. A state that raises its budget without expanding its industrial base or directing funding to supply-chain bottlenecks will find that the money buys far less than expected. A force that cannot replace its munitions, sustain a long fight or surge production in a crisis is less capable, and, as a result, less credible in the eyes of an adversary.
Warfighting credibility therefore depends as much on industrial capacity as on military strength. This means investing in physical infrastructure, qualified production processes, skilled labour and reliable suppliers, including funding the small and medium-sized firms that make the essential components.
Governments should direct part of any budget increase to the industrial base and give firms the long-term orders that justify building capacity. Without that investment, spending more just means paying more for less.
