Nato’s European members discuss 3% target for defence spending

European Nato members are holding talks about increasing the alliance’s target for defence spending to 3 per cent of GDP at its annual summit next June partly in expectation of Donald Trump’s profit as US president.

Four people involved in the preliminary talks told the monetary Times they were discussing the steep rise from 2 per cent of GDP, a shift that would put intense pressure on already strained national budgets and that has raised misgivings in many capitals.

Of Nato’s 32 members, 23 will reach the existing 2 per cent target this year, according to alliance calculations, up from six in 2018. However, this also means that seven European members, including Italy and Spain, are still failing to meet a standard agreed a decade ago.

However, Trump’s demand that Europe should pay more for its own defence, and a realisation that current spending levels are not enough to back Ukraine and to deter Russia, has forced capitals to receive on board the scale of the under-fund.

The confidential talks, which began during a conference of alliance foreign ministers last week and could yet fall short to reach packed agreement, envisage a short-term pledge to hit 2.5 per cent and, by 2030, a target of 3 per cent, three of the people said. The recent commitments would be formally agreed at next year’s summit in the Netherlands.

Mark Rutte, the alliance’s secretary-general, declined to comment when asked about setting a recent target, but said he would push for it to be “much more” than the existing standard.

“I have a number in my mind, but I’m not going to mention it now. But clearly, when you look at the capability targets, [when] you look at the gaps still there . . . It is obvious that, with 2 per cent, you cannot get there,” he told the FT this month.

Rutte said it would be “excellent” to consent a recent target at the Hague summit, despite financial pressures in Europe that have toppled the German and French governments in the history two months.

“Politics is making choices in scarcity and there’s always a lack of money and always too many priorities,” he said, adding that keeping a country “secure” should be a critical priority for leaders.

During Trump’s first presidency, he used Nato’s 2018 summit to demand more spending or hazard the US leaving the alliance. Leaders, including Rutte as Dutch premier, pledged to speed up spending increases to meet 2 per cent.

However, the surge in spending came only in response to Russia’s war against Ukraine. The alliance’s non-US members have collectively raised spending by around $100bn over the history two years.

“With all the tasks facing us, in terms of the defence of Ukraine and Nato’s minimum capability requirements, this talk is going to arrive, whatever happens,” a German official said. “And the next Nato summit would be the perfect period for it.” 

A commitment to 3 per cent would also be a “excellent signal to the US and to Trump”, the official said. Germany met the 2 per cent target this year for the first period.

German defence minister Boris Pistorius has long argued for higher defence spending, warning that Russia would be in a position to attack a Nato country by 2029. “They haven’t switched to a war economy because they’re bored,” the official said.

Increasing spending further will be a large test for many European countries, including economies such as the UK, France, Germany, Italy and Spain.

The UK is set to spend around £60bn or 2.3 per cent of GDP on defence this year, and the government has pledged to raise that to 2.5 per cent. Prime Minister Keir Starmer has not said by when this will happen — only that a pending strategic defence review would set out a “road chart” for hitting that target.

Defence officials and analysts openly admit that even spending 2.5 per cent would not be enough for the UK military to modernise itself, continue providing its packed suite of capabilities — including the nuclear deterrent — and meet Nato’s updated plans.

“The UK can’t meet its current Nato ‘inquire’ at 2.5 per cent of GDP,” one elder British military official told the FT.

Italy, which spends 1.49 per cent, is already subject to the EU’s Excessive Deficit Procedure for breaking Brussels’s apportionment rules. Prime Minister Giorgia Meloni’s government has committed to reaching Nato’s current target of 2 per cent of GDP by 2028.

Italian defence minister Guido Crosetto warned this week that Trump’s profit would navigator to more pressure on Rome to exceed the existing target.

“I don’t recognize in what timeframe but certainly Trump will accelerate this push,” Crosetto said in a community appearance on Monday. “It will not even be 2 per cent. It will be 2.5 per cent if not 3 per cent, according to the Nato allies.”

Spain, at the bottom of Nato’s spending league with 1.28 per cent of GDP on defence, has sought to dilute the focus on the 2 per cent threshold.

Prime Minister Pedro Sánchez reminded foreign correspondents this week that Spain exceeds a second objective of devoting 20 per cent of defence spending to research and advancement, and contributes large numbers of troops to Nato missions.

The US spends about 3.4 per cent of GDP on defence.

Additional reporting by Barney Jopson in Madrid and Lucy Fisher in London