NATO Reports 20% Surge in European and Canadian Defense Spending in 2025

Mar 26, 2026

NATO's 2025 annual report reveals all 32 member countries met the 2 percent GDP defense spending target for the first time, with European allies and Canada increasing expenditures by 20 percent to $574 billion amid ongoing tensions over the Iran conflict. Overall NATO defense spending reached $1.4 trillion, though the United States' share declined from 64 percent to 59 percent as its spending dropped marginally to $838 billion. Poland leads with 4.3 percent of GDP spent on defense while Spain, Portugal, Albania, Belgium and Canada remain at the 2 percent minimum. NATO members agreed to raise the spending target to 5 percent of GDP by 2035, with Europe and Canada's equipment spending surging 34 percent, signaling a major shift in transatlantic burden-sharing and military investment priorities.

NATO-wide achievement of 2% GDP defense spending target in 2025

▪Europe and Canada raised their defense expenditure by one-fifth in 2025.
▪NATO countries agreed to raise their defense spending target to 5 percent of GDP by 2035.
▪Europe and Canada increased their defense spending by 19 percent between 2024 and 2025 to $574 billion.
▪All 32 NATO member countries met the 2 percent of GDP defense expenditure target in 2025.
▪NATO's overall defense spending increased by 6 percent from 2024 to 2025.
▪NATO's overall defense spending reached $1.4 trillion in 2025.

Significant disparities in defense spending across member states

▪Defense spending dropped in Hungary, the Czech Republic and the United States between 2024 and 2025.
▪Luxembourg, Belgium and Slovenia raised their defense spending the most year-on-year in absolute terms between 2024 and 2025.
▪Spain, Portugal, Albania, Belgium and Canada spent the lowest share of their GDP on defense among NATO members in 2025 at 2 percent.
▪Lithuania, Latvia, Estonia, and Denmark spent well above 3 percent of GDP on defense in 2025.
▪Poland had the highest defense spending as a percentage of GDP among NATO members in 2025 at 4.3 percent.
▪Europe and Canada's spending on major equipment rose by 34 percent in 2025.
▪Greece spent the most on personnel as a share of total defense expenditure among NATO members in 2025.

Shift in defense burden from U.S. to European allies

▪The United States share of overall NATO defense spending decreased from 64 percent to 59 percent between 2024 and 2025.
▪United States defense expenditures shrank marginally from 2024 to 2025 to $838 billion.