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Nato 2% spend
Executive summary
NATO’s long-standing 2% of GDP defence guideline — agreed after 2014 — has been largely met across the alliance in 2025, with NATO projecting all allies will meet or exceed 2% that year and European allies plus Canada reaching a combined 2% for the first time [1] [2] [3]. In June 2025 the alliance raised the political ambition sharply: leaders endorsed a new goal to steer members toward 5% of GDP on defence- and security-related spending by 2035, with an interim emphasis on 3.5% for “core” defence and 1.5% for resilience/readiness [1] [4] [2] [5].
1. NATO’s 2%: from political guideline to near-universal milestone
The 2% benchmark originated as a political indicator of commitment after 2014; NATO’s public materials say it was an “important indicator” and report that, by 2025, all allies are expected to meet or exceed the pre-summit target of investing at least 2% of GDP in defence [1]. Independent outlets likewise report NATO’s projection that all 32 members will hit the 2% level in 2025, and that European NATO members plus Canada should collectively reach 2% for the first time [2] [3].
2. Why the 2% mattered — and its limits
Analysts and NATO officials framed 2% as a baseline measure of burden‑sharing and political resolve, but commentators have argued it was never a technical measure of specific capabilities [6]. The Associated Press records NATO experts saying that Europe’s defence plans need at least about 3% to secure certain contingency plans, and that percentage targets don’t map neatly onto required capabilities [7]. In other words, reaching 2% answered a political question but did not resolve capability shortfalls highlighted by NATO planners [6] [7].
3. The 2025 pivot: from 2% to 5% (and the 3.5% core definition)
At the June 2025 summit in The Hague, NATO leaders enshrined a far higher ambition: a 5% annual investment goal by 2035 for core defence plus defence- and security-related spending, with an agreed breakdown that at least 3.5% would be allocated to NATO’s “definition of defence expenditure” for core defence requirements [1] [5]. Think tanks and commentators called this a historic and politically significant pivot that more than doubles the alliance’s former guideline [4].
4. Political friction and practical questions
Not every ally views a raw percentage as the right measure. Spain’s leaders, for example, argued that capacity and capability targets matter more than a “raw percentage,” saying Spain could meet assigned capability goals at around 2.1% of GDP [7]. Reporting also shows internal debates about timing and feasibility: earlier discussion of interim figures like 2.5% were delayed amid concerns about alliance unity and differing national fiscal realities [8]. This reveals a persistent tension between headline targets that signal resolve and the political/economic trade-offs governments face domestically [8] [7].
5. Fiscal strain and unequal starting points
Commentary from SIPRI and others highlights that doubling targets raises fiscal sustainability questions: several NATO members carry high debt levels and elevated borrowing costs, and some would need constitutional or legal changes to free budget space for large military increases [4]. National starting points vary — Poland and the Baltic states have run much higher shares of GDP on defence, while larger economies like Germany, France, Italy and Spain historically spent below 2% before the recent increases — so the burden of further increases will be uneven [6] [3] [9].
6. Reporting caveats and measurement issues
NATO’s own reports caution that figures for 2024 and 2025 are estimates and that the alliance applies a specific NATO definition of defence expenditure which excludes items such as war damage payments and civil defence; reporting uses IMF exchange rates and USD as a common denominator [10] [1]. Reuters and NATO explain the 5% target will be “measured differently” (i.e., with a breakdown into core and broader defence-related spending), so headline percentage comparisons over time are not perfectly like‑for‑like [5] [1].
7. Competing narratives: capability-focused vs. headline pressure
Proponents of higher targets (including some U.S. officials and NATO leaders) argue that 2% is no longer enough given a more dangerous security environment and rising peer competitor spending — SIPRI described the 5% pledge as signaling renewed focus on military preparedness [4] [11]. Critics and some allies urge nuance: the AP records calls to prioritise assigned capabilities and review progress rather than rely solely on a percentage target, and domestic opposition to major hikes has already shaped political debates in countries such as Spain [7] [12].
Conclusion — what to watch next
NATO’s 2% marker has shifted from a contentious baseline to an alliance-wide expected minimum in 2025, but leaders have now replaced it with a more ambitious 5% political pledge to be realised by 2035, with interim focus on 3.5% for core defence. The key tests will be how NATO translates percentages into verified capability targets, how members manage fiscal constraints and domestic politics, and how NATO measures and reports the new categories of spending — all issues explicitly flagged in contemporary reporting [1] [4] [7] [5].