.Current German medium-term budget planning not towards 2% NATO target
In their 2014 meeting in Wales, the then 28 members6 of NATO agreed to “aim
to move towards the 2% guideline within a decade with a view to meeting their
NATO Capability Targets and filling NATO’s capability shortfalls”.
Based on NATO estimates, only five alliance members (US, Greece, UK, Estonia and
Poland) met this target in 2016.8 The other members received harsh criticism
from the new US administration at the May NATO meeting in Brussels.
Germany’s defence expenditures were the Alliance’s fourth largest in EUR-
terms but compared to its GDP ranked only 16 at 1.2%, below NATO’s 2%
target and 1.4% average.
The incumbent German government has pledged itself to address the defence
spending gap, reflected in substantial increases foreseen in the finance
ministry’s 2018-2021 budgetary planning. However, it can be shown that these
efforts are unlikely to be sufficient in order to meet the NATO target. For 2017,
the German 2017 defence budget is set at EUR 37 bn (equivalent to 1.1% of
projected GDP, based on the Finance Ministry’s economic assumptions).This
is a 5.3% nominal increase compared to the previous year and above the 3.8%
increase set for the total federal budget. It also makes defence the second
largest spending item (after social security) on the federal budget, accounting
for 11% of total expenditures. From 2018 to 2021, the finance
ministry’s budget planning released in June foresees an average annual
increase of the defence budget of 3.5% (or EUR 1.3 bn per annum) to EUR 42.4
bn in 2021.
In percentage terms, this is the largest budget raise of all federal
ministries, in euro terms the second largest again behind the social security.
EU Forecast
euf:ba18.d:74/nws-01