Defence Spending: Who Is Doing What? July 2024

Burden-sharing will be a key item on the agenda when heads of state and government meet in Washington for the NATO summit. NATO’s latest defence spending figures contain better news than we expected when we examined the data in April.

See the data examined in April 2024

See the data examined in February 2023

See the data examined in July 2023

The table below gathers data on the Allies’ recent defence expenditure, longer-term expectations and military spending priorities.

Notes:

* – Data from secondary source (e.g., media report), rather than from a primary source (e.g., government publication, ministerial communication)

¹ Figures for 2014 and 2024 defence spending as a share of GDP and 2014 and 2024 equipment spending as a share of defence expenditure drawn from NATO’s June 2024 defence expenditure report.

² The US Defence Budget for 2025 has a volume of $905 billion and $924 billion in 2026, according to the National Defence Budget Document of the US Ministry of Defense.

NATO will celebrate its 75^th anniversary in Washington DC on 9 July. It can also celebrate the fact that more Allies than ever are expected to reach the 2% of GDP target for defence spending—or bemoan the fact that almost a third of them will still not make the grade. Outgoing NATO Secretary General Jens Stoltenberg announced that 23 allies will reach the target in 2024, up from 7 in 2022 and 10 in 2023. In April, we expected that 20 Allies would be spending at 2% or higher this year, but NATO’s latest figures, which include  official 2024 estimates for the first time, add the Netherlands, Norway, and Türkiye to the list. This is, of course, positive news. On the other hand, except for Croatia, the nine countries that have not yet reached the 2% target are still a long way from doing so. If they did, NATO’s total defence spending would rise by about €50 billion – a little over half of Germany’s estimated 2024 spend. Canada, Italy, and Spain alone account for almost €38 billion of the shortfall.

If Allies spent the higher of either their current level or 2.5% of GDP, which some have proposed should be the new target, NATO spending would grow by around €140 billion. However, the growing disparity between Allies’ relative defence spending—Poland at 4.12% and Spain at only 1.28%—suggests that it will be ever more difficult for them to agree on where any new guideline should be set. This, and the rather weak outcome on defence spending at the Vilnius Summit, indicate that it is unlikely that NATO will move to a 2.5% (or other) target in Washington.

The longer-term data shows that almost all Allies expect to further increase their defence spending. Those countries currently spending less than 2% of GDP plan to achieve this by 2030 (except for Belgium (2035) and Canada (no plans)). The sustainability of higher levels of defence spending will, however, be a key question in years to come. The German Sondervermögen (special fund), for example, is expected to be used up by 2027 at the latest. As a result, from 2028, Bundeswehr funding could be reduced by €20 billion per year and German defence spending could again fall below 2%.

Regarding the 20% target for major equipment, 26 countries are expected to increase their investment spending between 2023 and 2024. Belgium and Canada are the only two Allies that will neither reach the 2% target for defence spending nor the 20% target for equipment spending this year.

Views expressed in ICDS publications are those of the author(s).