War in Ukraine, what does it cost Europe?

According to the IMF, Ukraine's financing needs remain very high and the risks are 'exceptionally high' due to the duration of the conflict and the instability of international support. The World Bank estimates external financing needs for 2025 at EUR 37 billion, making it urgent to secure new resources from 2026 onwards.

The latest figures from the Kiel Institute point to a dramatic slowdown in military aid in 2025. Ukraine is facing one of the years with the lowest number of new support decisions since the beginning of the war in 2022. Europe has allocated only EUR 4.2 billion in new military aid, a figure insufficient to compensate for the suspension of US support.

Within the EU, the divergences widened. France, Germany and the United Kingdom increased their allocations significantly, but in relative terms they remain behind the Nordic countries. Italy and Spain, on the other hand, contributed only marginally. Germany is the largest contributor of air defence systems and tanks, while Poland, the Czech Republic and the Baltic States provided the largest quantities of heavy armaments.

An often neglected chapter concerns the costs for the reception of refugees, which particularly burden Germany, Poland, Romania and the Czech Republic, but are generally accounted for in national budgets under the headings of social and education expenditure.

According to an October 2025 study by the European Parliament Research Service (EPRS), the EU institutions and the 27 member states have mobilised a total of EUR 177.5 billion in financial, military and humanitarian aid since the start of the Russian invasion in February 2022.

This figure includes macro-financial assistance and the EUR 50 billion Ukraine Facility for the period 2024-2027, of which EUR 38.27 billion is in the form of direct budget support, mainly through soft loans. Military assistance is estimated by the EPRS at EUR 63-65 billion, including member states' supplies and funds from the European Peace Facility.

The most relevant, but least visible chapter in the public debate, concerns support for refugees: according to estimates based on data from the Kiel Institute, the costs incurred by member states for reception amount to approximately EUR 155 billion between the beginning of 2022 and August 2025.

All in all, adding up EU budget programmes, military aid and refugee costs, Ukraine's 'bill' for the EU is around EUR 330 billion over three and a half years. On an annual basis, this is €90-100 billion, compared to an EU-27 GDP of over €15 trillion in 2024: about 0.6-0.7% of European GDP per year.

In addition to traditional budget items, European financial institutions also play a key role. According to a July 2025 note, the EIB Group mobilised EUR 3.6 billion in loans and guarantees for Ukraine, mainly for energy infrastructure, transport and small and medium-sized enterprises.

The European Bank for Reconstruction and Development (EBRD) is the main institutional investor in the country during the war: at the 2025 Ukraine Recovery Conference in Rome, it indicated a funding volume of EUR 7.6 billion, with the aim of maintaining an annual pace of EUR 1.5-2 billion.

These are not 'luxury' investments, but power plants, bridges, district heating networks, border crossings and business support: essential infrastructure to prevent a frontline country from becoming a permanently unstable neighbour.

The transatlantic debate about 'who pays the most' is politically useful, but the data show that Europe has already taken centre stage. According to the Kiel Institute, EU institutions and member states have committed EUR 165.7 billion since 2022, compared to EUR 130.6 billion of the United States.

Even on the military front, European countries have surpassed Washington in 2025: 65.1 billion versus 64.6 billion, plus an additional 32.8 billion in future European commitments.

However, it should be considered that a larger share of US aid is provided in the form of grants, while about 75% of European support consists of soft loans. This reduces the immediate budgetary impact, but exposes the EU to a long-term financial risk related to the possibility of recovering resources through Russian assets or future reparations.

The paradox is that the strongest argument against the idea that 'supporting Ukraine is too expensive' is to calculate how much it would cost not to do so. A study by the Norwegian analysis company Corisk and the Norwegian Institute for International Affairs (Nupi) compares two scenarios.

In the former, a (partial) Russian victory would force Ukraine into an 'unfavourable peace' with the loss of up to half of its territory. The cost to Europe in terms of refugees, social spending and defence would amount to EUR 1.2 to 1.6 trillion over four years.

In the second scenario, a Ukrainian victory through massive European rearmament would cost an estimated EUR 522 to 838 billion over the same period: roughly half the cost of the Russian advance scenario.

There is no official EU estimate of the costs of a direct war with Russia, but some analyses offer orders of magnitude. According to a report by the think tank Bruegel, if Europe were to fight Moscow without US support, 300,000 additional soldiers and EUR 250 billion per year in extra military spending would be required.

According to the Norwegian study, reinforcing NATO's eastern flank in the event of a conflict would bring the total European costs in the worst-case scenario to EUR 1.2 trillion to EUR 1.6 trillion, not including infrastructure damage in the Baltic States or Scandinavia, nor new waves of refugees. A figure that far exceeds what the EU spends today to support Ukraine.

*This article was written by Gyorgy Folk (Brussels) and is part of the EU project NEIGHBOURS east, a journalistic collaboration between newspapers from European countries.