Spanish soldiers during a North Atlantic Treaty Organization’s Allied Reaction Force training in Smardan, Romania, on Feb. 19. (Andrei Pungovschi/Bloomberg )
Spain, Germany and Belgium would face the biggest public-finance hit among European Union countries if NATO raised its defense spending target by a percentage point, according to Scope Ratings.
The credit-assessment company listed those countries in a report this week on the impact of a possible increase in the alliance’s expenditure goal to 3% of gross domestic product.
For Spain, the cost would be equivalent to 8.8% of the current revenues of its central government, Scope said. The hit to Belgium and Germany would be close to 7%, though in the latter case it would widen to around 13.8% after a special defense fund expires at the end of next year. In Italy and France, it would be around 5%.
The EU’s top diplomat, Kaja Kallas, said in an interview on Wednesday that joint bonds are an option to retool militaries as the bloc adjusts to the potential withdrawal of US support and Donald Trump’s calls for the region to spend more on its defense. She added that the bloc could also look at redirecting unused money from a Covid pandemic recovery fund. Scope highlighted the benefits of a collective approach.
“Centralizing EU security and defense financing could provide more sustainable and coordinated financing across member states while also creating economies of scale in defense and security procurement,” analysts Alvise Lennkh-Yunus, Eiko Sievert, and Brian Marly wrote.
Scope reckons that on average, EU members would need to allocate an extra 0.8% of GDP annually if NATO adopted a 3% goal.
