Sweden eyes rise in defence spending to 3.5% of GDP by 2030

By Niklas Pollard and Stine Jacobsen

STOCKHOLM (Reuters) -Sweden provisionally aims to raise defence spending to 3.5% of GDP by 2030, a bigger and faster ramp-up than previously planned as part of its biggest rearmament since the Cold War, Prime Minister Ulf Kristersson said on Wednesday.

Defence spending has so far been projected to reach 2.4% of GDP this year and 2.6% in 2028, but government ministers have acknowledged more will be needed given U.S. warnings that European security can no longer be Washington's primary focus.

The government believes NATO will soon set a goal for member states to spend between 3% and 4% of GDP, and Sweden will meet the new target, with a provisional estimate set at 3.5%, Kristersson told a press conference.

"It is difficult to know exactly where it will land. We are pushing for it to be high enough to significantly increase the European NATO countries' ability to defend Europe," he said.

Sweden will also ramp up aid to Ukraine this year, boosting the 2025 budget allocation to 40 billion Swedish crowns ($4.0 billion) from 25 billion projected earlier, to aid Kyiv's fight against Russian invasion, the government said.

Sweden, which has not been at war for two centuries, has doubled defence spending over the past four years as it looks to reinforce a military starved of investment since the 1991 collapse of the Soviet Union.

U.S. President Donald Trump has said NATO countries must hike defence spending to 5% of GDP, from a 2% goal currently, and that the U.S. may not defend those lagging.

Kristersson said uncertainty about the trans-Atlantic relationship was now high and likely to remain so.

"My view is that the stronger the European part of NATO becomes, the more interesting and important it will also be for the U.S. to cooperate across the Atlantic, and vice versa."

Sweden's low public debt leaves it better able to raise military spending than many other European countries. The government and main opposition unveiled plans last year to ease budget spending rules to facilitate rearmament, much like Germany is now doing.

Kristersson said the government and the anti-immigration Sweden Democrats, which support it in parliament, had agreed to help fund the rearmament by raising loans of about 300 billion Swedish crowns over a period running to 2035.

"A new and far-reaching security policy situation requires new decisions, both urgent ones and long-term ones," he said. An additional 25 billion crowns would be allocated to military equipment purchases already this year.

($1 = 10.0526 Swedish crowns)

(Reporting by Niklas Pollard and Johan Ahlander in Stockholm and Stine Jacobsen in Copenhagen; editing by Louise Rasmussen, Terje Solsvik and Mark Heinrich)