Now Tell Me, How Do You Feel about the 2 Percent Target? NATO Defense Spending One Year after the Epochal Change
ifo Institut, München, 2023
ifo Schnelldienst digital, 2023, 4, Nr. 3, 01-14
In 2014, NATO member states committed to increase their defense spending to or towards 2% of their economic output within ten years. Calculations by the ifo Institute show that only 11 of 30 NATO members are expected to spend at least 2% on defense in 2023. The estimates also show that defense spending by NATO and candidate country Sweden will amount to around 1.2 trillion euros in 2023, or about 2.6% of total economic output. However, more than two-thirds of this expenditure is accounted for by the United States, which exceeds the 2% target by about 330 billion euros. The other member states spend less than 1.8% of their economic output on defense. Their gap between actual spending and the 2% target is more than 50 billion euros. According to the calculations, Germany, with an underspend of 17 billion euros compared to the 2% target, will continue to place the greatest burden on the financial resources available to the Alliance in 2023.