How NATO nations need to sell the 5 percent spending hike to their own people

Kristen Taylor 

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At the NATO Summit earlier this summer, NATO allies agreed to raise their defense spending target to 5 percent of GDP by 2035 — with 3.5 percent focused on hard security and 1.5 allocated to defense-enablers like critical infrastructure and cybersecurity. The move, pushed by the White House, represents a much-needed increase in spending to match mounting challenges to international security. Allies are already signaling considerable progress toward this goal. Following the Summit announcement, Berlin unveiled an ambitious plan to double its military spending by the end of a decade—a welcome, albeit delayed, commitment from Europe’s largest economy.

But the 5 percent figure belies the true cost. The gross domestic product of allied countries dwarfs annual national expenditures. So, while a rise from 2 to 5 percent of GDP may not seem like much on face value, but as a share of national expenditure, it is a massive ask, and one the people could begin to feel, sooner rather than later.

To understand the scale of the new spending request, look to Berlin. In 2024, Germany spent 2.12 percent of its GDP on defense, allocating a little over $97 billion in defense spending. In the same year, Germany spent approximately $485 billion on total national expenditures. In total, as a share of national outlays, this accounts for approximately 20 percent of Germany’s national expenditures. All else equal, if Germany were to increase defense spending to the newly agreed target, more than 47 percent of Germany’s total budgetary expenditures would go toward defense. Some allies, particularly laggard spenders who do not meet the 2 percent goal currently, face even sharper projections.

Now, this is an imperfect metric. These pledges have a time horizon over a decade; GDP certainly will not remain stagnant for allies over this time; economic conditions and tax demands will fluctuate; countries may be able to count already-planned infrastructure development toward the 1.5 percent for defense enablers; and governments and their constituencies will adjust spending based on the state of the international security environment balanced with domestic priorities.