Current medium-term budget planning
Current medium-term budget planning not towards 2% NATO objective.
The German government initiated a “turnaround in the financing of the Bundeswehr”
to meet alliance commitments and adjust to a changing security environment.
To reach NATO’s 2% of GDP target by 2024, defence expenditures would have
to more than double within seven years to around EUR 80 bn. Spending
increases planned by the FinMin suggest that the defence/GDP ratio might
rather remain close to current levels of around 1.2%. But adjustments of the
medium-term budget are common under a new government.
More fiscal leeway for spending increases than many NATO/Eurozone partners.
Germany is in a more comfortable fiscal position to reach the NATO target than
many other Eurozone/NATO peers. France will cut its defence spending this
year to stay in the Maastricht fiscal limit – but at 1.8% of GDP is closer to the
NATO objective.
More is demanded of other euro area members, such as Spain
and Italy with limited fiscal space and defence spending at half the NATO target.
EU Forecast
euf:ba18.d:65/nws-01