31 August 2025
European NATO member states and Canada should collectively reach the alliance’s 2% of overall economic output (Gross Domestic Product, GDP) spending target for the first time this year, according to NATO estimates of military spending released on 28 August.
The estimates show that all member states are finally projected to meet the target more than a decade after it was pledged at a summit in Wales in 2014. Albania, Belgium, Canada, Italy, Luxembourg, Montenegro, North Macedonia, Portugal, Slovakia, Slovenia and Spain are all expected to reach that mandated threshold for the first time. The data excludes Iceland, which is a NATO member but has no armed forces, and as such doesn’t have a traditional military budget.
Having reached this baseline target, NATO member states are now expected to move towards a more exacting and controversial target of 5% of GDP, as mandated at the June Hague Summit.
The new 5% target includes 3.5% of GDP on core defence spending, with an additional 1.5% of GDP to be spent on defence-related investments (such as upgrading roads, bridges, ports and airfields so armies can better deploy and establishing measures to counter cyber and hybrid attacks and preparing societies for future conflict). NATO member states will have to meet the new target by 2035 at the latest. However, only three are projected to meet the core 3.5% goal in 2025.
The push for higher military spending is one result of the Russia-Ukraine war, which has created heightened security concerns across most of Europe, and especially on the Eastern flank. Poland, which aims to bring its military spending to 5% of GDP in 2026, remains the biggest spender among all 32 NATO member states, with an estimated 4.48% of GDP due to be spent on its military in 2025. It is followed by the three Baltic countries: Lithuania (4%), Latvia (3.7%) and Estonia (3.4%).
The new target is also a reaction to pressure from US President Donald Trump, who has repeatedly accused European allies of not investing enough in their own security. Trump has warned Europeans that Washington might not defend those who fail to meet these commitments. Many European countries, including Spain and Belgium, face major economic challenges and Trump’s global tariff war could make it even harder for many European NATO member states and Canada to reach the new military spending targets.
Germany’s 2025 figures are not yet included in the latest NATO data since the country’s budget had not been approved at the time the data was collected, but it already reached the 2% target in 2024. Germany finalised its 2025 budget late after the collapse of its previous government and an election in February. The country’s Finance Minister Lars Klingbeil said in June that German military spending will hit 2.4% of GDP in 2025 and 3.5% by 2029. Speaking on the 28 August in Wurzburg, Germany, where he was attending a political conference, NATO Secretary General Mark Rutte praised Germany’s accelerating militarisation. “By 2029 Germany will spend over 150 billion euros ($175 billion) on its defence. That is more than doubling what you spent in 2021, that’s almost four times of what you spent in 2018,” Rutte said. “And that means that you really take the lead in Europe, and we need that in Europe. You are the second biggest economy in NATO, the biggest economy in Europe”.
There are caveats in how the NATO data is calculated, with differences between national governments relating to how they measure military spending and GDP. “The amounts represent payments by a national government that have been or will be made during the course of the fiscal year to meet the needs of its armed forces, those of allies or of the alliance”, NATO said in the release.
The estimates indicate that collective military spending by European NATO and Canada will increase to 2.27% of GDP in 2025, up from 1.99% in 2024 and 1.40% in 2014 when the original target was set. When the United States is added, the total NATO rate is increased to 2.76% of GDP in 2025.
Overall, military expenditure from NATO Europe and Canada should grow by 15.9% year-on-year, a slight decrease from 2024, but still significantly higher than the 2.6% annual growth registered in 2021 before Russia launched its full-scale invasion of Ukraine.
The United States is in joint sixth position with Denmark, with 3.22% of its GDP due to be spent on the military in 2025. Given Washington’s huge territory and GDP, as well as its global military presence, the United States is estimated to spend some $980 billion on the military this year, more than 10 times the budget of the UK, which is the second biggest spender in real terms.
All NATO members except Belgium are expected to meet a target to spend at least 20% of their defence expenditure on major equipment, according to the estimates. The list of countries buying military equipment is led by Poland, which is expected to spend around 54% of its defence budget on weapons and military kit.
