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Headlines

EU members of NATO ready to raise defence spending beyond 2% of GDP, Costa says

Published by Global Banking and Finance Review

Posted on January 30, 2025

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By Sergio Goncalves

LISBON (Reuters) - The 23 EU members who also belong to NATO are likely to agree to raise the defence spending target above the current 2% of national output at a June summit of the alliance that will set a new level, European Council President Antonio Costa said.

U.S. President Donald Trump has been pressuring NATO allies to raise defence spending to 5% of gross domestic product (GDP) - a target none of the 32 NATO member states, including the United States, currently meets.

Costa has scheduled an informal meeting of European Union leaders next Monday to discuss defence and security investment, he said late on Wednesday in an interview with Portuguese public broadcaster RTP.

NATO's Secretary-General Mark Rutte and British Prime Minister Keir Starmer will also attend the meeting, he added.

Joint defence spending by the 23 EU countries in NATO already meets the 2% target after they increased it by 30% since Russia's invasion of Ukraine in February 2022, Costa said.

"There is a very reasonable consensus among member states to continue on this path," he added.

"I would anticipate that, surely, at the next NATO summit in June, a target higher than 2% will be set," Costa said. "Whether it's 5%, whether it's 3%, I don't know, it's a decision that member states will make within NATO."

The European Council headed by Costa groups the national governments of the 27-member EU.

Analysts and officials have told Reuters that spending 5% of GDP on defence was politically and economically impossible for almost all NATO members as it would require billions of dollars in extra funding. However they say the allies are likely to agree to go beyond the current 2% target at the June summit.

Costa, a former Portuguese prime minister, said Russia was the main threat to NATO and that countries must prioritise improving air defence, anti-missile and electronic warfare systems.

Spending on defence technology and industry will also strengthen the EU economy's competitiveness, he said, adding there would eventually be a need for a discussion on "common funding" to collective defence.

France and the Baltic states are pushing for joint European Union borrowing to fund defence spending. The outcome of that debate may depend on next month's national election in Germany, which has so far opposed the idea.

(Reporting by Sergio Goncalves; Editing by Gareth Jones)