The High Cost of a 5% Defense Target for Europe
NATO foreign ministers attend a meeting of the North Atlantic Council in foreign ministers format at the NATO headquarters in Brussels, Friday, April 4, 2025. (Source: AP Photo/Geert Vanden Wijngaert)
Europe faces a stark choice: bolster its defense spending to meet the United States’ proposed 5% of the GDP target, or risk jeopardizing its robust social welfare systems. President Donald Trump’s earlier call for a significant increase in NATO defense spending was re-awakened with the US Secretary of State Marco Rubio’s first NATO meeting last week. The subsequent underlying tension between military preparedness and social programs remains a critical challenge for Western European nations. Meeting this ambitious goal would require a massive financial commitment, forcing difficult decisions with profound implications for healthcare, education, and other vital social services.
Western European countries are significantly below the 5% defense spending target. A comparison of several key nations reveals a substantial disparity. This shortfall presents a considerable financial challenge. For example, France currently allocates 2.1% of its GDP to defense, but this figure is projected to rise to 3.5% with the new government's budget. But even with this additional €30 billion in spending, it still falls far from the 5% target. Moreover, before the invasion of Ukraine, defense spending in many European nations had generally declined in recent decades, making the attainment to the 5% target even more difficult.
Italy's Foreign Minister Antonio Tajani, center, speaks with the media after a meeting of the North Atlantic Council in foreign ministers format at NATO headquarters in Brussels, Friday, April 4, 2025. (Source: AP Photo/Geert Vanden Wijngaert)
Necessary funds could come from several sources, each with significant drawbacks. Raising taxes, particularly in an already strained post-pandemic economic climate, is likely to be extremely unpopular, and can potentially spark widespread public backlash and undermine political stability. Significant cuts to government spending in other crucial areas – healthcare, education, infrastructure, or social welfare – would inevitably follow, leading to a deterioration of public services, which could exacerbate social inequalities and further fuel popular discontent. Increased borrowing, while potentially a short-term solution, would saddle future generations with crippling debt, and would carry long-term economic consequences.
The potential impact on Europe's social safety net would be particularly acute. The substantial funds required for increased defense spending could translate into reduced healthcare access, longer waiting lists, lower quality education, and significant cuts to welfare benefits. While recent polls suggest three quarters of Europeans support an increase in defence spending, they are unlikely to willingly give up current social services or pay higher taxes.
However, increased borrowing also carries significant risks, as a surge in national debt could destabilize economies, which potentially can lead to higher interest rates, inflation, and a further squeezing of the already constrained budgets. Furthermore, reliance on external borrowing could leave European nations vulnerable to geopolitical pressures and influence from lending institutions.
NATO Secretary General Mark Rutte addresses a media conference after a meeting of NATO foreign ministers in Brussels, Friday, April 4, 2025. (Source: AP Photo/Geert Vanden Wijngaert)
A nation-by-nation analysis reveals a spectrum of responses. Countries such as Poland have indicated a willingness to increase defense spending significantly, primarily driven by the threat from Russia. Belgium has openly rejected the 5% target as economically unfeasible. Meanwhile, southern European countries have an even larger gap to bridge; Spain, Italy, and Portugal all spend well below 2% of GDP. The EU itself has indicated the most it can spend in the coming years is €500 billion, falling €300 billion short of 5%. The divergent approaches reflect differences in geopolitical priorities, economic realities, and political ideologies which could ultimately destabilize the union.
The 27 EU finance ministers are set to meet in Warsaw early next week to discuss spending plans. In brief, the looming choice between military preparedness and social welfare represents a defining moment for European leadership, demanding careful consideration and potentially painful compromises.