NATO has promised a spending blitz. Can its European members afford it?

The North Atlantic Treaty Organization, the defense alliance of 32 countries, is on a spending spree, with plans to funnel billions into their militaries and security systems over the coming decade.

But it’s a splurge that some European members of NATO, grappling with huge and ballooning debt burdens, can ill-afford.

“It’s something unprecedented in peacetime to have such a massive increase in spending on any item – in particular, on defense,” Marcel Fratzscher, president of the German

Hard choices

Many NATO countries have failed to meet the previous, 2% target, set in 2014. Most have increased spending in recent years in response to Russia’s full-scale invasion of Ukraine in 2022 – so much so that the European Union’s executive arm expects its 23 member states belonging to NATO to meet that target this year, based on their combined GDP.

Frank Gill, a senior sovereign credit ratings analyst for Europe, the Middle East and Africa at S&P Global Ratings, thinks that meeting the 3.5% target alone will require European countries, including the United Kingdom, to borrow huge sums of money. Some nations may also cut or reallocate government spending to reduce the amount they need to borrow, he said, but that could prove difficult.

“A lot of (European governments) are facing other fiscal pressures… not least aging populations, which are essentially leading to even higher pension spending,” Gill told WNN. “Politically, (that) is very challenging to cut.”

Fratzscher at DIW in Germany agrees.

Crushing debt

Simply borrowing more is a similarly tricky option in Europe where a number of governments are already saddled with debts close to, or larger than, the size of their country’s entire economy.

All else remaining equal, meeting just the 3.5% “core” defense spending target could add roughly $2 trillion to the collective government debt of NATO’s European members, including the UK, by 2035, according to a recent analysis by S&P Global Ratings. That compares with combined GDP of $23.1 trillion for the EU – a proxy for European NATO members – and Britain, based on World Bank data for 2024.

Those are already heavy burdens. On Tuesday, French Prime Minister François Bayrou said the EU’s second-largest economy risks a “crushing by debt.” He warned that, should nothing change, just the interest France pays on its debt will swell to €100 billion ($117 billion) in 2029, becoming the government’s largest single expense. He still supports splashing the cash on defense, while reining in other government spending.