European NATO defense spending rose by almost 20% in 2025

Key Points:

• NATO Secretary General Mark Rutte reported a 20% real-terms increase in defense spending by European allies and Canada in 2025, with total investment reaching $574 billion, more than double the 2014 expenditure.
• All NATO allies met the 2% of GDP defense spending target, with three countries already achieving the new 3.5% goal set for 2035, reflecting recognition of the changing security environment.
• US defense spending slightly declined to $838 billion in 2025 but still accounted for 59% of NATO’s total defense expenditure, as European and Canadian spending rose by over 19% for the second consecutive year.
• Several European countries narrowly met the 2% GDP defense spending threshold, while top spenders like Poland, Lithuania, Latvia, Estonia, Denmark, and Norway exceeded the US rate of 3.19%.
• Rutte emphasized the importance of the NATO summit commitments to increase defense and related spending to 5% of GDP by 2035, warning of ongoing threats from Russia and its allies, and underscored the need for a strong transatlantic alliance amid global uncertainty.