Nato’s European allies and Canada increased defence spending by 3.8% last year, or $10bn more than 2015, the alliance said yesterday, and said Britain was keeping up with its target after a report said London missed its goal.
Russia’s annexation of Crimea has given the alliance new momentum after years of cuts, but differences remain about the pace of investment.
The International Institute for Strategic Studies (IISS), a security think tank, said only Greece and Estonia met a target to spend 2% of economic output on defence.
A North Atlantic Treaty Organisation (Nato) official told Reuters that five allies, including Britain, met or exceeded Nato’s benchmark in 2016.
Nato is expected to release its full 2016 figures next month.
Europe’s low expenditure has long been a sore point for the United States, which puts up 70% of alliance funds, and US President Donald Trump has made change a priority, saying that allies have “been very unfair to us” for not spending more.
Nato will tell new US Defence Secretary Jim Mattis today in Brussels that Europe is responding.
“We are making a significant step forward but we have a long way to go ... it is not enough,” Nato chief Jens Stoltenberg told a news conference, saying that Trump raised the issue in the two phone calls the two men have held.
However, Russia’s 2014 annexation in Ukraine and the rise of Islamist militancy – not US pressure – led to last year’s increase in European spending, Nato diplomats and analysts said.
Stoltenberg said the Baltic states of Latvia and Lithuania, who fear a repeat of Crimea, were on course to meet the 2% goal, while Romania was also heading towards that level.
Germany is increasing spending by €2bn ($2.13bn) in this year’s budget.
However, the IISS’s study said Britain’s level fell slightly to 1.98% in 2016 as the economy grew faster than defence outlay.
Poland also slipped, it said.
Britain said the IISS figures were incorrect as the think tank presented its figures in US dollars and so had been impacted by exchange rate fluctuations.
“Nato’s own figures clearly show that the UK spends over 2% of its GDP on defence,” a spokesman for the ministry of defence said. “Our defence budget is the biggest in Europe, the second largest in Nato, and it is growing each year as we invest £178bn ($221.88bn) in new equipment.”
In 2015, only Greece, Estonia, Poland and Britain hit the 2% Nato target.
British Prime Minister Theresa May, who discussed the issue with Trump last month, has warned EU leaders to raise their defence spending.
Stoltenberg acknowledged difficulties.
“The picture is still mixed, some allies are still really struggling,” he said when asked about budget constraints in Italy, which is trying to reduce its budget deficit following the eurozone crisis.