January 19, 2018 / 11:43 AM / a month ago

Germany missed NATO spending projection due to GDP growth: BDI

BERLIN (Reuters) - Germany spent just 1.13 percent of its economic output on the military in 2017, falling below NATO’s projection of 1.22 percent, itself well below the Alliance’s agreed 2 percent target.

An analysis by the BDI industry association showed on Friday the lower 2017 figure was mainly due to stronger-than-expected economic growth, which lowered the percentage.

The new data, however, comes amid continued debate in Germany about the agreement by NATO members to work toward spending 2 percent of gross domestic product on the military. U.S. President Donald Trump has insisted that Germany and other NATO members should sharply increase their spending on the military.

BDI expert Matthias Wachter said the analysis showed the Germany had “clearly fallen short” of its 2014 promise to gradually increase military spending, and warned the percentage could drop further in coming years if the economy expanded.

Plans hammered out by German conservatives and Social Democrats (SPD), would-be partners in a new governing coalition, foresee a military budget of 42.4 billion euros ($52 billion) in 2021, up from 37 billion euros in 2017. SPD delegates will vote Sunday on whether to enter into formal coalition negotiations.

Given current economic growth projections, that spending level would amount to 1.15 percent of gross domestic product (GDP) in every year from 2018 to 2021, BDI calculated. The BDI numbers were first reported by Germany’s Handelsblatt newspaper.

German conservatives continue to back plans to increase military spending to the 2 percent NATO target, Henning Otte, a conservative lawmaker, said on Friday ahead of a parliamentary debate on the issue.

He said plans worked out during exploratory talks on a coalition with the SPD were moving in the right direction, but further efforts would be needed.

But German Foreign Minister Sigmar Gabriel and other SPD leaders have questioned the NATO target, underscoring the need for increased spending on development, and the NATO target was not mentioned in a blueprint agreed by coalition negotiators.

The blueprint endorsed the 2018-2021 budget plan that was proposed by the previous left-right Grand Coalition government, which foresaw additional spending of 9 billion euros through 2021, and called for 1 billion euros in additional spending to be split between development programmes and defence.

NATO Secretary General Stoltenberg has said that NATO members agreed in 2014 to halt a fall in military spending and move toward the 2 percent target by 2024, not achieve the 2 percent target “tomorrow.”

($1 = 0.8153 euros)

Reporting by Sabine Siebold; Writing by Andrea Shalal Editing by Jeremy Gaunt

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