German Chancellor Olaf Scholz on Monday dismissed incoming US president Donald Trump’s demands that Germany and other NATO allies spend at least 5% of gross domestic product (GDP) on defence.
“Five percent would be over €200 billion ($204 billion) per year, the federal budget is not even €500 billion,” Scholz said at an election campaign event in the central German city of Bielefeld. “That would only be possible with massive tax increases or massive cuts to many things that are important to us.”
However, Scholz promised that Germany would adhere to the current NATO target of spending at least 2% of GDP. Germany reached that mark last year for the first time since the end of the Cold War.
“I guarantee that we will continue to spend 2% of our economic output on defence,” Scholz said. “Anyone who says that’s not the way to go must also say where the money will come from.”
Germany’s defence spending was boosted by a €100 billion special fund created in the wake of Russia’s February 2022 full-scale invasion of Ukraine, which put new focus on the poor state of some European militaries.
But it remains unclear how Germany will maintain that level of spending long-term, given the tight budget situation and strict rules against deficit spending anchored in the country’s constitution.
NATO set itself the 2% target in 2014.