With defence spending likely to be a heated topic of discussion at Vilnius Summit, not least because the credibility of NATO’s new defence plans will require the Allies to invest more, we look at what has changed since we examined the data in February.
See the data examined in February.
The table below gathers data on the Allies’ recent defence expenditure and their longer-term expectations.
|Ally||2014 Defence Expenditure|
|2022 Defence Expenditure|
|2023 Defence Expenditure|
|The Longer Term||Spending Priorities|
|Baykar Bayraktar UAVs, Javelin anti-armour & Stinger anti-air systems|
|Belgium||0.97%||1.19% ↑||1.13%||1.57%-2030 ↑*|
|Fire support and air-defence capabilities, development & strengthening of military intelligence capabilities, establishment of full cyber command by 2024.|
|Bulgaria||1.31%||1.62% ↓||1.84%||2.00%-2024||Upgrading air-defence capabilities through purchases of 3D radars & air defence systems, drones, multi-purpose submarines, and friend or foe identification technology.|
|Canada||1.01%||1.22% ↓||1.38%||1.50%-2027 ↓*||F35 fighter jets.|
|Croatia||1.82%||1.82% ↓||1.79%||NA||Short & medium range air defence (Mistral surface-to-air missiles, multi-purpose fighter jets), Bradley infantry fighting vehicles, SPIKE anti-tank missiles, Patria armoured personal carriers.|
|Czechia||0.94%||1.34% ↑||1.50%||2.00%-2024||F35 fighter jets, CV90 armoured vehicles|
|Denmark||1.15%||1.38% ↓||1.65%||2.00%-20301 ↑*||Heavy infantry brigade, surveillance & intelligence capabilities, anti-submarine warfare.|
|Estonia||1.93%||2.16% ↓||2.73%||3.00%-20242 ↓*||HIMARS launchers, medium-range air defence, SPIKE anti-tank missiles, joint procurement programme with Latvia to purchase logistical and other vehicles.|
|Finland||1.29%||1.68%||2.45%||NA||F35 fighter jets, small arms, anti-ship & anti-aircraft missiles, Common Armoured Vehicle System (CAVS)|
|France||1.82%||1.88% ↓||1.90%||2.00%-2025||Seabed warfare, nuclear modernisation, military intelligence, Rafale fighter jets, 60% boost to intelligence spending|
|Germany||1.19%||1.49% ↑||1.57%||2.00%-2025*||F35 fighter jets, PUMA fighting vehicles, F126 frigates, future combat air system|
|Hungary||0.86%||1.82% ↑||2.43%||NA||Strike sensors, military integration, land-based capabilities, modernisation of infantry fighting vehicles|
|Italy||1.14%||1.51% ↓||1.46%||2.00%-2028||Tempest fighter jets|
|Medium range air defence, Costal defence systems, HIMARS launchers|
|Lithuania||0.88%||2.47% ↑||2.54%||2.52%-3.00%-20233||UAVs, air-defence capabilities, HIMARS launchers|
|UAVs & aerial surveillance, cyber-defence, air transport, intelligence gathering, military SATCOM network|
|Armoured howitzers, long-range missiles (naval), F35 fighter jets, reaper UAVs|
|North Macedonia||1.09%||1.62% ↓||1.87%||2.00%-2024||JLTV & STRYKER armoured vehicles, air defence systems, cyber security|
|Norway||1.55%||1.51% ↓||1.67%||2.00%-2026*||F35 fighter jets, military infrastructure modernisation & expansion in northern Norway, expansion of terrestrial vehicles and personnel|
|Poland||1.86%||2.40% ↓||3.90%||5.00%-NA ↑*||Increasing size of armed forces, K2 battle tanks, K-9 howitzers, FA-50 training and light aircraft|
|Slovakia||0.99%||1.81% ↓||2.03%||NA||Military trucks, small arms, anti-aircraft systems, armoured infantry vehicles, slight increase in military personnel|
|Air transport, increasing personnel|
|Spain||0.92%||1.07% ↑||1.26%||2.00%-2030 ↓||Eurofighter Typhoon fighter jets, high mobility rocket launchers|
|UK||2.13%||2.16% ↑||2.07%||2.50%-NA ↓||NA|
|US||3.72%||3.45% ↑||3.49%||3.20%-2024 ↑*|
|Naval procurement: 11 battle-force ships, and a new destroyer|
* – Data from secondary source (e.g., media report), rather than from a primary source (e.g., government publication, ministerial communication)
1 Recent secondary sources cite Danish government officials claiming defence spending will temporarily hit 2.00% of GDP in 2023 & 2024 (including Ukrainian military aid donations). After which time, spending will fall again.
2 Outdated Estonian primary source claims defence spending will reach 3.26% of GDP in 2024.
3 Prediction for 2024 expenditure comes from secondary source while, 2028 prediction comes from official government source.
4 One additional secondary source cites 2028 as the year when Sweden will hit 2.00% of GDP spending on defence.
The latest release of NATO’s defence spending data includes the first estimates of 2023 defence expenditure, updated estimates for 2022 and, for the first time, figures for Finland.
Compared to the data we looked at in February, which was issued by NATO in June 2022, the revised estimates for 2022 defence spending as a percentage of GDP are slightly lower for many Allies. The changes, however, are mostly small and, in many cases, can be explained by higher estimates for GDP rather than reductions in real defence expenditure. In fact, when measured in local currencies, estimated real expenditure is higher for all but one Ally this time.
One notable development in the Baltic region is that Lithuania’s estimated spending for 2022 is almost 10% higher than previously reported, taking its relative to GDP figure from 2.36% to 2.47%. Lithuania’s national defence funding received a one-off 300-million-euro inject in mid-2022, which has since been locked into longer-term spending plans.
Nonetheless, the revised estimates indicate that in 2022 only seven (rather than the previously reported nine) Allies met the 2014 Wales Summit defence investment pledge to spend 2% of GDP on defence (Croatia and Slovakia have dropped from the list). This is undoubtedly a poor look for the Alliance. It points both to the need for better policing of whatever targets NATO agrees to, and to the likelihood that Allies will be reluctant to sign up to more ambitious targets in Vilnius.
The figures for 2023 look a little brighter, with 25 Allies expected to spend more than in 2022 and 11 Allies expected to meet NATO’s 2% of GDP guideline. For the longer term, the good news is that most Allies have plans, or at least aspirations, to meet this target too, even if some will take several years to get there.
For the longer term, the changes since February are generally small. A handful of Allies have slid back, either lowering their percentage of GDP expectations, or extending the timeline for meeting figures they have previously announced (the down arrows in the table). At the same time, a similar number have either increased their expectations or advanced their timelines. Allies that have recently promised substantial increases in spending include Czechia, Denmark, Finland, Italy, and Norway.
The risk, though, is that without solid political or legal agreements to ringfence defence expenditure (NATO indicates that only 4 Allies have national agreements to lock defence spending at a minimum of 2% of GDP) other domestic spending priorities, inflation, and the cost of debt will prevent Allies from delivering on their promises. Reports from Allies such as Belgium, Canada, Germany, Luxembourg, and Türkiye illustrate the challenges Allies will face not only in reaching the NATO guideline, but in sustaining it for years to come.
The Baltic states and Poland will push for more ambitious spending targets at Vilnius, but they will face resistance from Allies who struggle to meet the present goal, or even have no prospects of doing so. Furthermore, they are unlikely to find much support from the US, which appears to have settled only on pressing Allies to meet the present goal. Perhaps the most likely summit outcome is that Allies will reaffirm the existing defence investment pledge, embellished with the recognition that 2% is a floor, not a ceiling. Arguably, this is already the case: the Wales Summit declaration refers to “the NATO guideline to spend a minimum of 2%”.
Another way of encouraging Allies might be to focus more on the second, less well-known part of the defence investment pledge: that Allies should spend at least 20% of their defence budgets on major equipment. According to NATO’s new figures, all Allies are expected to exceed this guideline for the first time in 2023, some (Poland, Finland, Luxembourg, Hungary) by a considerable margin, suggesting that it might be raised. However, Allies receiving boosts to their defence expenditure for major equipment programmes (Finland, for example, for its purchase of F-35 Lightning IIs and Pohjanmaa class multi-role corvettes) may have difficulties in sustaining high levels of equipment spending in the longer term.
Defence spending has been a source of—sometimes angry—debate among the Allies for decades. While there may be some progress at Vilnius, the need to correct the results of many years of under-investment in defence in Europe, to replenish inventories depleted by donations to Ukraine, and to reinforce deterrence and defence in a deteriorated security environment will ensure that this issue remains high on the defence agenda.
Views expressed in ICDS publications are those of the author(s).