Hub Podcasts What does a higher NATO spending target mean for Canada?
Jun 12, 2025
Trevor Tombe, a Professor of Economics at the University of Calgary, dives into what a higher NATO military spending target could mean for Canada. He discusses the implications of Canada's commitment to increase NATO spending to 2% of GDP and what a possible rise to 5% might entail. Tombe sheds light on potential budgetary shifts, the impact on public finances, and how military spending could shape Canada's regional identities amid geopolitical changes. His insights on Alberta's evolving role also add depth to the conversation.
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Canada's Rising NATO Spending Targets
- Canada had been spending around half of the NATO recommended 2% of GDP on defense but plans to meet the 2% target soon.
- NATO may raise the spending goal to 5% of GDP, dramatically increasing Canada's fiscal and military commitment.
Historic Scale of Military Spending Increase
- Meeting the projected 3.5% core defense spending target by 2035 would be Canada's highest since the 1950s Korean War era.
- This would triple the current military budget in real terms and have major implications for federal finances.
Financial Trade-offs of Military Buildup
- Financing the increased military spending without cuts or tax hikes could push Canada’s federal debt-to-GDP ratio to unsustainable levels above 50%.
- Alternative funding through spending cuts or tax increases would require significant trade-offs or revenue nearly doubling relative to current levels.