Military spending around the world reached a record high last year, driven by an increase in expenditure in Europe not seen since the end of the Cold War three decades ago following Russia's invasion of Ukraine, a leading conflict and armaments think tank said on Monday.

Worldwide military expenditure hit its eighth record as it rose by 3.7% in real terms in 2022 to $2.24 trillion, or 2.2% of the world's gross domestic product (GDP), the Stockholm International Peace Research Institute (SIPRI) said in a statement.

"It's driven by the war in Ukraine, (which is) driving European budget spending upwards, but also the unresolved and worsening tensions in East Asia between the U.S. and China," researcher Nan Tian, one of the study's co-authors, told Agence France-Presse (AFP).

Europe spent 13% more on its armies in 2022 than in the previous 12 months, in a year marked by Russia's war on Ukraine, which began in February 2022.

"This included multi-year plans to boost spending from several governments," SIPRI Senior Researcher Diego Lopes da Silva said. "As a result, we can reasonably expect military expenditure in Central and Western Europe to keep rising in the years ahead."

Moscow says its "special military operation" was necessary to safeguard it against what it sees as a hostile and aggressive West. Ukraine and its Western allies say Russia is waging an unprovoked war to grab territory.

The think tank said that the figure does not consider sharp inflation rates, which means actual spending was even higher.

That was the most substantial increase in more than 30 years, and a return, in constant dollars, to the level of spending in 1989 when the Berlin Wall fell.

"In Europe, it is at its highest level since essentially the end of the Cold War," Tian said.

Sevenfold increase in Ukraine

Ukraine alone increased its spending sevenfold to $44 billion, or a third of its GDP, the largest annual increase recorded in SIPRI data from 1949. The country has also benefitted from billions of dollars of weapons donations abroad.

Meanwhile, Russia's military spending grew by an estimated 9.2%, though SIPRI acknowledged figures were "highly uncertain given the increasing opaqueness of financial authorities" since its war in Ukraine began.

"The difference between Russia's budgetary plans and its actual military spending in 2022 suggests the invasion of Ukraine has cost Russia far more than it anticipated," said Lucie Beraud-Sudreau, Director of SIPRI's Military Expenditure and Arms Production Program.

"Irrespective of whether you remove the two warring nations, European spending has still increased by quite a lot," Tian said.

Spending in Europe, which totaled $480 billion in 2022, has already risen by a third in the past decade, and the trend is expected to continue and accelerate over the next decade.

Tian said the continent could "potentially" see growth levels similar to 2022 for several years.

After declining sharply in the 1990s, global military expenditure has risen since the 2000s.

The upturn was initially the result of China's massive investments in its military, followed by renewed tensions with Russia after it annexed Crimea in 2014.

U.S. and China account for half

The U.S. alone accounted for 39% of global military expenditure. Together with China, which came in second at 13%, the two nations accounted for more than half of the world's military spending.

SIPRI estimated that military aid to Ukraine accounted for 2.3% of total U.S. military spending in 2022.

Those next in line lagged far behind, with Russia at 3.9%, India at 3.6% and Saudi Arabia at 3.3%.

"China has been increasingly investing in its naval forces as a way to expand its reach to Taiwan, of course, then further out than the South China Sea," Tian said.

Japan, Indonesia, Malaysia, Vietnam and Australia follow the trend.

Britain is the top spender in Europe, coming in sixth place overall and accounting for 3.1% of global expenditures, ahead of Germany at 2.5% and France at 2.4% – figures which include donations to Ukraine.

Britain, Ukraine's second-biggest donor behind the U.S., "spends more than France and Germany. It also gave more military aid than France and Germany," said Tian.

Countries like Poland, the Netherlands and Sweden were among the European countries that increased their military investments the most during the past decade.

Modern and costly weapons also explain some spending hikes, as in the case of Finland, which purchased 64 U.S. F-35 fighter jets last year.