Economy July 6, 2026 10:03 AM

European NATO Members and Canada Reach Roughly 4% of GDP in Defense Outlays, Rutte Says

Secretary General says near-20% jump in core defense spending and $258 billion in planned 2025-26 investments bring allies closer to 2035 target

By Maya Rios
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NATO Secretary General Mark Rutte told reporters that European allies and Canada have raised combined defense spending to about 4% of GDP, driven by a near-20% rise in core defense outlays last year. Rutte said the extra planned investment for 2025 and 2026 totals $258 billion and expects detailed plans at the Ankara leaders summit to meet a 5% of GDP goal by 2035.

European NATO Members and Canada Reach Roughly 4% of GDP in Defense Outlays, Rutte Says
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Key Points

  • European NATO countries and Canada have together raised defense and security spending to about 4% of GDP, per Mark Rutte.
  • Core defense budgets grew nearly 20% year-over-year, and planned investments for 2025-26 total $258 billion, boosting procurement and defense industry activity.
  • NATO’s 2035 objective is 5% of GDP in total defense-related spending, split between 3.5% for core defense and 1.5% for security-related items; nations are expected to present implementation plans at the Ankara summit.

NATO Secretary General Mark Rutte said on Monday that European NATO members together with Canada have increased their combined defense and security spending to roughly 4% of gross domestic product.

Speaking to reporters ahead of a leaders summit in Ankara, Rutte highlighted a sharp rise in core defense budgets, noting that European allies and Canada boosted core defense spending by nearly 20% last year compared with the prior year. He also said that the cumulative increase planned for 2025 and 2026 represents an additional $258 billion in investment.

Those figures come against the backdrop of an agreement reached at last year’s NATO summit to raise overall defense spending to 5% of GDP by 2035. That target is structured to include 3.5% of GDP devoted to core defense investments and a further 1.5% of GDP allocated to related security items.

Rutte said he expects member nations to lay out concrete implementation plans at the Ankara summit to reach the 5% objective. He emphasized that, while the initiative spans a ten-year horizon, European allies and Canada are already committing roughly 4% of their GDP to defense and security just one year into the program.

In addition to budgetary increases, the NATO chief said member states will unveil new procurement contracts at a defense industry forum scheduled for Tuesday. He characterized those forthcoming announcements as contracts worth tens of billions of dollars.


Context and implications

The statements describe a coordinated push by European NATO members and Canada to expand defense expenditures significantly within a multi-year framework. The near-term increases and planned investments for 2025-26 signal a material rise in defense-related spending flows and procurement activity.

At the Ankara summit, member states are expected to present the next steps in translating the 5% of GDP objective into specific budgets and programs, including the split between core defense investments and broader security-related items.


Key data cited by NATO

  • Combined defense and security spending by European allies and Canada: about 4% of GDP.
  • Increase in core defense spending last year versus the previous year: nearly 20%.
  • Additional investment planned for 2025 and 2026: $258 billion.
  • Long-term NATO target agreed last year: 5% of GDP by 2035 (3.5% core defense, 1.5% security-related).

Risks

  • The timeline and adequacy of national plans to reach the 5% of GDP target remain to be detailed at the Ankara summit - this creates uncertainty for defense contractors and government budget planning.
  • How spending will be allocated between core defense investments and security-related items could affect which defense programs and suppliers receive priority, introducing execution risk for specific segments of the defense industry.

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