NATO Secretary General Mark Rutte is set to press allies at this week’s summit that they are honouring commitments to lift defence spending. But the effort to meet the alliance’s new target is uneven across Europe and Canada, and in several countries the drive is beginning to strain national finances.
Under pressure from U.S. President Donald Trump, the 32-member alliance agreed at last year’s meeting to increase combined defence and security-related spending to 5% of GDP by 2035. That figure comprises a core defence target of 3.5% of GDP by 2035 plus a further 1.5% of GDP earmarked for security-related items. The 5% target is slightly more than double the combined level for European states and Canada in 2025.
NATO reported that European members together with Canada increased defence expenditures by an additional $90 billion in real terms last year compared with 2024 as they pursue the pathway to the 3.5% core commitment. Rutte has highlighted that, in nominal terms, the new spending amounted to a larger $139 billion and has said there is a "strong commitment" among allies to hit the combined 5% benchmark on schedule.
Despite the headline figures, two distinct groups of countries have emerged. On one side are Germany and a cluster of Nordic and eastern European nations that have found fiscal room to raise defence budgets. On the other side are several large European economies that have struggled to match that pace.
"The UK isn’t managing, for example. France isn’t and Italy isn’t either," Guntram Wolff, senior fellow at the Bruegel economics think tank, said of the three largest economies in Europe behind Germany. The comment underlines that scale alone has not guaranteed fiscal headroom for faster defence build-ups.
Germany plans to use a rule change that exempts defence items from strict borrowing limits in order to double its defence spending to over c200 billion between now and 2030, according to a budget draft released ahead of a cabinet review. That planned uplift in German outlays is among the clearest examples of a government reallocating fiscal capacity to meet the alliance’s objectives.
By contrast, Britain last week announced measures to add 15 billion of defence spending, with some of the increase to be funded by cuts elsewhere in the public finances. Officials acknowledged, however, that one-third of the announced uplift remains unfunded, creating an early budget challenge for the likely new prime minister Andy Burnham. The package has also drawn criticism for failing to specify when defence spending would reach 3% of GDP on the way to Britain’s 3.5% NATO commitment by 2035.
"Defence spending will likely remain one of the biggest fiscal pressures facing the UK in the medium term," said Max Warner, senior research economist at the Institute for Fiscal Studies.
Some of the sharpest moves are in countries closest to perceived security threats. Poland, Lithuania and Estonia have rapidly increased defence spending and are well on track toward the new targets. Poland in particular devoted 4.3% of GDP to defence last year, a notable departure from historical levels and a clear signal of the country’s prioritisation of military capabilities.
Italy plans to tell the summit that Rome, despite carrying one of Europe's largest public debt burdens, will lift combined core and non-core defence spending to 2.8% of GDP in 2026, which is roughly 0.71 percentage point higher than last year. Yet Italian leaders acknowledge that much of the increase will be routed through domestic security spending such as police duties, reflecting both political sensitivity and electoral considerations ahead of next year’s national vote.
France has set out plans, detailed in April, to raise defence spending to 2.5% of GDP by the end of the decade from about 2% today, while simultaneously aiming to bring the overall deficit into line with euro area rules. That fiscal tightening will be pursued even as France approaches presidential elections next year. Spain’s Socialist government has signalled it will not go beyond 2.1% of GDP on defence, and any new resources there are expected to favour technologies with civil applications.
Questions have also risen over the accuracy of some national spending claims. NATO officials have asked the Czech Republic, Slovenia and Albania to re-examine and re-submit figures after those capitals asserted they had met the alliance’s earlier 2% benchmark. A senior NATO official emphasised the need for clarity: "For us, the challenge is to ensure that Allies remain on the credible path towards that 3.5% commitment, if you keep on bumping along at 2%, then you’re not on the credible path."
Bruegel’s Wolff noted a political advantage for European leaders compared with last year’s summit, suggesting they can now point to concrete spending increases when discussing burden-sharing. "Unlike at last year’s summit in the Hague, European leaders can look Trump in the eye and argue they have stepped up to shoulder the burden of a Ukrainian war effort that has shown it is able to resist Russian advances," he said.
Even where governments are pledging more money, defence contractors may be cautious about expanding production. NATO and national officials say suppliers will need confidence that higher government purchases will be sustained before making the investments required to increase capacity.
"There has been a before Trump, and there will be an after Trump, so this 5% target can change any time," Ana Boata, head of economic research at Allianz Trade, said. "So I think there is a bit of scepticism from European defence companies to actually ramp up investments in order to ramp up production." Her comments capture industry hesitancy that could slow the translation of budget pledges into higher output and deeper stockpiles.
As NATO ministers and heads of government meet, the alliance will weigh both recent spending gains and the political constraints that remain. The challenge for capitals is twofold: to sustain upward budgetary momentum where possible and to provide the predictability defence firms say they need to boost capacity. Without durable funding paths, the numerical targets risk remaining aspirational rather than material drivers of industrial expansion.
($1 = 0.8757 euros) ($1 = 0.7497 pounds)