NATO defence push strains Europe’s budgets

Under pressure from ​U.S. President Donald Trump, NATO members agreed at last year’s summit to boost defence spending to 5% of GDP by 2035. NATO Secretary General Mark Rutte will insist at this week’s alliance summit that member states are keeping their promise to boost defence spending. Yet progress has been uneven and the push is already stretching some national budgets. Since 2025, two camps have emerged: one is led by Germany and the mostly Nordic and eastern European nations which have found the fiscal space to raise spending; in the other are several big players struggling to do the same.

Poland, Lithuania and Estonia – countries where the perception of the threat posed by Russia is at its sharpest – are already well ​on their way to making the new targets, with Warsaw notably having devoted 4.3% of GDP to defence last year. Elsewhere the push faces political and fiscal roadblocks.

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. Still, arms suppliers will need to be convinced that government defence spending will remain high before they make ⁠the investment needed ​to increase their capacity. ”There has been a before Trump, and there will be an after Trump, so this 5% target can change ​any time. So I think there is a bit of scepticism from European defence companies to actually ramp up investments in order to ramp up production“, said Ana Boata, head of economic research at Allianz Trade.