FT pointed to the possibility of a financial crisis in Italy with an increase in military spending

Italy risks facing a financial crisis due to rising public debt if Rome fulfills its earlier commitment to NATO allies to increase military spending to 5%. This was reported on November 10 by the Financial Times (FT) newspaper.

According to the S&P Global Ratings rating agency, by 2035, Italy's public debt will amount to 137.7% of GDP. If Rome meets the goals set by NATO through additional loans, the debt—to-GDP ratio will rise to 148.4%, an almost record high that was exceeded only at the peak of the COVID-19 pandemic in 2020, when the ratio reached 154%.

Rome expects that in 2025 the budget deficit will be only 3%, and next year it will be reduced to 2.7% of GDP, which will allow Italy to get out of the EU procedures to combat excessive deficits and open the way to loans from Brussels under the SAFE (Security Action for Europe) fund for co-financing. military procurement. However, such a plan would only increase Rome's debt burden.

Under pressure from US President Donald Trump, in June 2025, Italy and other alliance members agreed to increase basic defense spending to 3.5% of GDP by 2035 and allocate an additional 1.5% of GDP per year to strategic infrastructure. Rome has one of the lowest rates among its NATO allies. In 2024, Italy spent only 1.5% of GDP on defense, and hopes to increase this figure to only 2% in 2025.

Andrew Hunter, senior economist at Moody's Analytics, believes that the goals of the Europeans remain very illusory, given that in many European countries "there is neither the financial capacity nor the political will" to reduce other spending in favor of defense. According to forecasts by S&P Global Ratings, the United Kingdom, France, and Belgium are among the many European governments that risk dramatically increasing public debt if they seek to pay for additional defense obligations through loans.

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Bloomberg reported on July 28 that Germany's defense budget could double (to €162 billion) over the next four years, as Germany seeks to rearm on a large scale and meet NATO targets to increase defense spending to 3.5% of GDP.

The Berliner Zeitung (BZ) newspaper noted on August 9 that the German authorities had begun to rearm the Bundeswehr in order to create the strongest army in Europe. It was noted that within the framework of this project, Germany plans to submit more than 60 arms purchase contracts to Parliament for approval by the end of the year.

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