Still, Germany is in a more comfortable fiscal position to reach the NATO target
than many other Eurozone partners.
In France, President Emmanuel Macron finds himself between two conflicting objectives – his declared commitment to
the 2% NATO target and his pledge to meet the 3% Maastricht deficit limit (DB
forecasts the French fiscal balance at -3.1% of GDP for 2017). In order to
realign the French fiscal balance with the Stability and Growth pact, Macron
announced fiscal spending cuts, including a cut of EUR 850 m to France’s EUR
32 bn 2017 defence budget.
However, in order to stay on the trajectory to reach
2% of GDP by 2025, he plans defence spending to go up again from 2018. That
being said, France’s total effort necessary to meet the NATO target is much
lower than Germany’s, with defence spending already at 1.8% of GDP,
according to NATO estimates.
More is demanded of other euro area members,
such as Spain and Italy who only have limited fiscal space within the Maastricht
framework and defence spending at only around half the NATO target.