Global nuclear arms spending up 11% in 2024, campaign group says

A new report from the International Campaign to Abolish Nuclear Weapons (ICAN) indicates that global spending on nuclear weapons rose by 11% to $100.2 billion in 2024, driven by modernization and expansion of arsenals. The United States accounted for the largest increase, spending $56.8 billion, exceeding the combined expenditure of all other nuclear-armed states. While geopolitical tensions, particularly the war in Ukraine, may contribute, ICAN suggests that rising costs associated with long-term contracts and developing nuclear delivery systems are primary drivers of the increased expenditure.

Analysis

Global expenditure on nuclear weapons surged by 11% in 2024, reaching $100.2 billion, an increase of $10 billion from the previous year, according to a report by the International Campaign to Abolish Nuclear Weapons (ICAN). The United States was the primary driver of this growth, with its spending rising by $5.3 billion to $56.8 billion, an amount exceeding the combined expenditure of all other nuclear-armed states. China's spending was reported at $12.5 billion, while the United Kingdom increased its expenditure by $2.2 billion to $10.4 billion. ICAN attributes this substantial rise primarily to ongoing modernization programs, potential arsenal expansions, and significantly, the escalating costs associated with servicing long-term contracts and developing sophisticated nuclear delivery systems. While geopolitical tensions, such as the war in Ukraine and NATO's perception of Russia as a primary threat, are acknowledged in political rhetoric and contribute to increased overall defense spending, ICAN suggests these are not the principal drivers for the specific surge in nuclear weapons expenditure, which is more influenced by long-term procurement cycles and developmental expenses. The report highlights the immense scale of this spending, noting it could have funded the United Nations' budget 28 times over.

Key Decisions for Investors

• Investors should monitor companies in the defense sector, particularly those involved in nuclear arsenal modernization and delivery system development, as they may benefit from the sustained $100.2 billion annual global spend and its 11% growth.
• Given ICAN's emphasis on rising costs of long-term contracts and development, scrutiny of profit margins and contract execution for relevant defense contractors is warranted.
• Heightened geopolitical tensions and national commitments to increased defense spending, as referenced in the report, suggest a continued robust environment for defense-related investments, although specific nuclear program funding remains a key variable to watch.
• Investors with ESG considerations should note the significant and increasing allocation of resources towards nuclear weapons, which may conflict with certain investment mandates and require portfolio review.