Europe short of €56bn per year to achieve NATO target

European NATO member states require additional €56 billion every year year in order to achieve the target defense spending level of 2 per cent of GDP, the Financial times reported, citing the research by the Leibniz Institute for Economic Research at the University of Munich (ifo).

According to the ifo research, many EU countries with the largest shortfall, including Belgium, Spain and Italy, also have some of the highest levels of debt and budget deficit in Europe.

Germany has the greatest shortage: in 2023, Berlin spent €14bn less on NATO defense than it was necessary to achieve the target figure. The research notes that, in the past decade, Germany has covered half of this gap (adjusted for inflation), and plans to resolve this issue entirely by the end of 2024. In terms of shortage, Germany is followed by Spain (€11bn), Italy (€10.8bn) and Belgium (€4.6bn).

"The countries with high debt levels and high interest rates do not have much space to increase their debt, so the only real way for them is to cut expenses in other areas," economist Marcel Schlepper said, according to ifo. He noted that this is a difficult process and provided the example of Germany, which faced farmer protests over the government’s plans to cut the subsidies and to cancel a number of tax benefits.