NATO's 5% Target Explained: 3.5% Core + 1.5%, and Who Meets It in 2026

NATO's 5% target is the commitment Allies made at The Hague summit on 25 June 2025 to invest 5% of GDP a year by 2035: at least 3.5% on core defence, plus up to 1.5% on defence- and security-related investment such as critical infrastructure, networks, civil preparedness, innovation and the defence industrial base. NATO's latest estimates, published in July 2026 with a data cut-off of 3 July 2026, show five Allies already at or above 3.5% core spending in 2026 (Lithuania, Estonia, Latvia, Poland and Greece) and five projected to meet the full 5%. European Allies and Canada average 2.53% of GDP on core defence.

This explainer covers what was agreed, what counts in each bucket, Spain's opt-out, and a country-by-country table from NATO's own figures.

What NATO agreed at The Hague

The Hague Summit Declaration is five paragraphs long. Its core sentence commits Allies "to invest 5% of GDP annually on core defence requirements as well as defence-and security-related spending by 2035". It then splits the 5% into two categories:

• 3.5% core: Allies "will allocate at least 3.5% of GDP annually based on the agreed definition of NATO defence expenditure by 2035", to resource core requirements and meet NATO Capability Targets. They also agreed to "submit annual plans showing a credible, incremental path" to that level.
• 1.5% related: Allies "will account for up to 1.5% of GDP annually" to protect critical infrastructure, defend networks, ensure civil preparedness and resilience, support innovation and strengthen the defence industrial base.
• Review: "The trajectory and balance of spending under this plan will be reviewed in 2029", in light of the strategic environment and updated Capability Targets.
• Ukraine: direct contributions to Ukraine's defence and its defence industry count when calculating Allies' defence spending.

The 5% replaced the 2% of GDP guideline set at the Wales summit in 2014, which also asked Allies to put 20% of defence budgets into equipment, as CSIS notes. The Hague text set no new equipment share.

What counts in the 3.5%

The 3.5% uses NATO's long-standing definition of defence expenditure, set out at the end of NATO's 2026 spending report. In short:

• Spending on the armed forces (land, maritime, air, joint formations, special operations, cyber and space commands) counts, including from budgets outside the ministry of defence.
• Other forces such as gendarmerie, carabinieri or coast guards count only in proportion to the part that is trained, equipped and deployable as a military force.
• Military pensions count, wherever they are paid from. So do research and development, peacekeeping and humanitarian operations, weapons destruction, and contributions to eligible NATO-managed trust funds.
• War damage payments and civil defence spending are excluded.

Pensions are a known grey zone: they raise the headline ratio without adding new capability. That is one reason to read the core figure alongside the equipment share, which CSIS puts at nearly 32% of Allied defence spending on average in 2025, up from 13% in 2014.

What counts in the 1.5%

The 1.5% is much looser. The declaration lists its purposes "inter alia", which means the list is not exhaustive, and NATO's 2026 report repeats the same wording rather than publishing a detailed definition. NATO also caps each Ally's reported figure at 1.5% of GDP when it calculates averages, and those averages include only Allies that have reported.

That looseness invited creative accounting. In 2025 Italian officials reportedly argued that the €13.5 billion bridge over the Strait of Messina could count as dual-use infrastructure. After US Ambassador to NATO Matthew Whitaker warned against padding budgets with "bridges that have no strategic military value", Italy's transport ministry said no defence funds were earmarked for the bridge, Defense News reported on 3 September 2025. For Italy, 1.5% of GDP is about €30 billion a year.

On our reading of the declaration's wording, items that plausibly fit include military mobility upgrades to roads, rail and ports, hardening of energy and undersea infrastructure, cyber defence of civilian networks, civil protection, and investment in the defence industrial base and innovation, including programmes like those in our pieces on the NATO DIANA 2026 cohort and the NATO Innovation Fund portfolio. Whether a given euro qualifies is, for now, largely each Ally's call.

The 2035 deadline and the path to it

Allies have ten years from The Hague to reach 5%, with a review in 2029. NATO says many Allies "have already laid out concrete plans to reach the 5% spending goal by, or before, 2035". In 2025, European Allies and Canada raised core defence spending by more than 19% on 2024, an increase of over $90 billion in constant 2021 prices, or about $139 billion in nominal terms, according to the NATO report.

At the Ankara summit on 7 and 8 July 2026, leaders said "Allies are delivering on The Hague defence commitment" and announced more than $50 billion in new procurements, according to the declaration text published by Türkiye's Directorate of Communications. Pressure from Washington continues: in June 2026 US Defense Secretary Pete Hegseth criticised some Allies for lacking a "credible path" to their Hague commitments, CSIS reported.

Spain's position

Spain is the one Ally that refused the target. On 22 June 2025, days before The Hague, Prime Minister Pedro Sánchez said Spain would not spend 5% of GDP and would meet its NATO commitments by spending 2.1%, after an exchange of letters with Secretary General Mark Rutte, the Associated Press reported. The summit wording was changed so that it no longer referred to "all allies". Sánchez called the 5% target "incompatible with our worldview", and President Donald Trump criticised Spain as a very low payer.

Spain held that line in Ankara. Government sources said a blanket 5% commitment was incompatible with its welfare state and sustainable public finances, and that Spain had already reached 2%, Anadolu Agency reported on 7 July 2026. NATO's own estimate puts Spain's core spending at 2.00% of GDP in both 2025 and 2026, up from 1.42% in 2024, slightly below the 2.1% Madrid cites. Startups based in Spain are listed in our Spain directory page.

Who meets it in 2026: NATO's country estimates

The table below shows core defence expenditure as a share of GDP for NATO's European Allies, with Canada, the United States and the Alliance aggregates for reference. Figures are from Table 3 of NATO's Defence Investment of NATO Countries (2014-2026), published in July 2026 with a cut-off of 3 July 2026; 2025 and 2026 are estimates, based on 2021 prices. Iceland has no armed forces and is not included.

*NATO notes that Slovenia's figures were those in place when its new government took office on 4 June 2026, and that the government has promised a credible plan to exceed 2% this year and reach 3.5% by 2035.

Three points stand out.

1. Five Allies are at 3.5% core already: Lithuania (5.33%), Estonia (5.10%), Latvia (4.92%), Poland (4.68%) and Greece (3.65%). Denmark is just short at 3.49%. Lithuania and Estonia exceed 5% on core spending alone. NATO says five Allies are projected to meet the overall 5% in 2026 but does not name them in the release, and it says 17 Allies are predicted to meet the 1.5% guideline. Our guide to Poland's defence industry shows what that level of spending buys, and the Lithuania and Estonia pages list their start-ups.
2. The big economies are far from 3.5%: Germany 2.69%, the United Kingdom 2.56%, France 2.22%, Italy 2.10% and Spain 2.00% in 2026. Germany has the steepest climb of the five, from 2.00% in 2024.
3. Not everyone is above 2% even now: on these revised estimates, Czechia (1.86%) and Slovenia (1.57%) were below 2% in 2025, and Slovenia remains below it in 2026 at 1.61%.

On aggregate, European Allies and Canada are at 2.53% core in 2026. Adding the capped defence- and security-related investment of those Allies that reported it brings the figure to 3.93%, according to NATO's Graph 3. Closing the gap from 2.53% to 3.5% on today's GDP would mean core spending about 38% higher in real terms (our arithmetic: 3.5 divided by 2.53), before any economic growth.

What to watch

• Annual national plans, which the Hague declaration requires and which will show whether the path to 3.5% is credible.
• Accounting for the 1.5%, where the lack of a detailed definition leaves room for dual-use infrastructure claims.
• The 2029 review, which could adjust the balance between the two buckets.
• EU instruments: EU Member States alone spent €418 billion on defence in 2025, according to the European Defence Agency, and part of the growth is now financed through EU loans, as explained in our pieces on SAFE defence loans and ReArm Europe and Readiness 2030.

For the companies that will supply this spending, browse the European defence tech directory.