Tax hikes and soaring debt might be Germany’s new reality, as NATO allies are set to soon face a higher defense spending target.
The country in 2024 spent around 2% of its gross domestic product (GDP) on defense, coming in at over 90 billion euros ($104 billion), according to a NATO estimate. While that expenditure is in line with the existing NATO target, it falls short of the 5% spending goal members of the military alliance have now reportedly agreed on.
Under the new rules, members would be expected to allocate 3.5% of GDP to classic defense spending and 1.5% to broader related matters such as infrastructure and cyber security.
The U.S.-led push for more defense spending has been highly contested, with some NATO members saying they would struggle to assign more funds to such expenditures, while others have been supportive. While Germany has said that it backed the proposal by U.S. President Donald Trump’s, questions linger over whether a 5% target is truly feasible for Europe’s largest economy.
Jumping from a 2% GDP expenditure to 5% would see Germany spend additional tens of billions of euros on defense each year, with Chancellor Friedrich Merz saying earlier this year that 1% of the country’s GDP would represent around 45 billion euros.
