While Europe internalised that the US was the super power, it did not internationalise that the West was no longer dominant. It has also not understood its diminishing importance to the US in the world in which its economy is proportionately so much smaller, and the rival superpower is in Asia, not Europe.

Spending on defence is expensive, but its a lot cheaper than an actual war - "if you want peace, prepare for war"

War is very expensive, but it also creates tons of jobs in supply. In ideal world its a fools errand, in reality if you dont have a mighty force to defend yourself and deter enemy, you can be easily taken over. Even a big well funded military is a paper tiger at best if it never experienced complex combat, maintaining supply lines etc.

Thats the only thing that works for the likes of russia (or anybody really) who is by far the biggest threat to Europe and would love to see it subjugated.

That was also the only reason Switzerland wasnt taken over by nazi Germany like Austria was, they mustered up to 800k voluntees/draftees in a country of 5 million, fortified and made it clear that Germany would bleed hard to gain that territory (they would invade anyway after defeating russia that was clear also from hitler&himmler's writings, top german brass hated Switzerland, what it represented and considered it a mortal enemy to 3rd reich but I am going off topic here).

5% is nothing if there is enough motivation. Overbuilt bureaucracy for nothing juse employing tons of rather useless paper pushers, ineffective social systems that are abused hard by those really not deserving it, bad budget management by politicians, corruption in megaprojects and ao on. Its really nothing.