Over the past 10 years NATO countries have significantly increased their defence budgets amid growing geopolitical threats. However, meeting the 2% of GDP target remains a challenge for some Alliance members.
Current defence spending by NATO countries
According to NATO Secretary General Jens Stoltenberg, European NATO countries and Canada invested $470 billion in defence in 2024. At the same time, 23 out of 32 of the alliance’s states have reached a defence spending level of 2% of GDP.
However, the distribution of spending among countries remains uneven. In 2024, the US accounted for 63.7% of NATO’s total defence budget – $754.7bn out of $1.18 trillion. Germany and France spent $76.9bn and $55.2bn on defence respectively. Montenegro had the smallest defence budget – $107 million, or 2.02% of GDP.
Trump’s pressure to increase defence spending to 5% of GDP
US President Donald Trump has added further pressure on NATO allies to increase defence spending to 5% of GDP. In December 2024, he said the spending level should be raised from the current 2% to 5%, which would amount to a 150% increase.
This demand has met with resistance from European leaders. German Vice Chancellor Robert Habeck called Trump’s proposal unrealistic, noting that reaching the 5% level is unlikely. He suggested setting a target of 3% of GDP and considering a special fund to finance defence projects or reforming the debt brake rule.
Europe’s initiatives to strengthen defence capabilities
In response to the pressure from the US, the European Union has proposed initiatives to strengthen defence capacity. French President Emmanuel Macron has asked EU members to increase their defence budgets to 3-3.5% of GDP, questioning the credibility of the US as an ally.
In addition, the European Commission has created a plan to deploy up to €800 billion in four years to finance Europe’s rearmament programme. €150bn will be provided as loans secured by the European budget. The program aims to break Europe’s dependence on the US for protection and enhance its own defense system.
Despite significant progress in increasing defence spending, NATO countries face serious challenges to achieving more ambitious goals. Economic constraints, political differences and popular opinion shape the ability of NATO countries to increase defense budgets. Political will and collective action are required to ensure security and stability in the region.