NATO’s new 5% defence spending target and what it means | Explained

NATO leaders are set to endorse a sweeping increase in defence investment at a key summit in The Hague on Wednesday (June 24), responding to rising geopolitical tensions and direct pressure from US President Donald Trump. The landmark agreement would commit member states to spending 5% of their Gross Domestic Product (GDP) on defence and security-related investments by 2035—a significant jump from the current 2% benchmark.

What the new target entails

The proposed 5% spending goal will be divided into two parts:

3.5% of GDP on core defence, including troops, weapons systems, and combat readiness—up from the current 2% focus.

1.5% of GDP on broader security investments, such as cyber defence, infrastructure upgrades for military mobility, and energy security.

This broader definition reflects modern security challenges, including the need to defend against hybrid threats and safeguard strategic supply chains.

Why this is a big deal

While 22 of NATO's 32 members already meet or exceed the 2% defence target, the new 5% threshold presents a major leap. In 2024, NATO countries collectively spent 2.61% of GDP on defence, though with wide disparities—Poland exceeded 4%, while Spain lagged at under 1.3%.

If all members had spent 3.5% on core defence last year, total spending would have surpassed $1.75 trillion, compared to the $1.3 trillion actually spent.

Timeline and review

Member states are expected to meet the new target by 2035, with a review scheduled for 2029 to evaluate progress and potentially adjust expectations.

Why the increase?

The decision is driven by a combination of:

Russia’s ongoing war in Ukraine and fears of a broader military threat within the next five years.

Concerns over a potential drawdown of US forces in Europe, especially if Trump returns to the White House.

A broader reassessment of Europe's ability to defend itself.

“NATO must prepare for a future in which it has to take on more responsibility,” Secretary-General Mark Rutte said, pointing to urgent needs in air defence, tanks, drones, and personnel.

Disagreements and opt-outs?

While the agreement appears to have broad support, some nations are expressing reservations. Spanish Prime Minister Pedro Sanchez has said Spain will only aim for 2.1% of GDP, even though his government signed off on the final communiqué.

Despite such statements, NATO insists there are no opt-outs, and national defence spending will be closely monitored.