Citi analysts warn that Western European governments struggle to balance security needs and fiscal limitations as US President Trump pushes for increased defense spending from NATO allies. While pressure could drive European nations towards a 3% of GDP defense spending target, this goal might not be reached until the 2030s. Citi suggests that resistance to US demands could lead to uncertainty surrounding US security guarantees, potentially forcing Europe to independently strengthen its defense capabilities. Eastern European countries like Poland are already exceeding the 3% threshold, while Western European nations like the UK and France face significant fiscal constraints.
Investing.com -- Western Europe an governments face a complex balancing act between addressing security threats and managing fiscal constraints, according to Citi analysts.
If countries resist these demands, there could be “real ambiguity around US security guarantees,” which would likely force Europe to unilaterally bolster its defense capabilities. “ UK Strategic Defense Review in 2025 may prove a clear example of the pressure the UK Chancellor of the Exchequer is under,” said Citi.
NATO DEFENSESPENDING USPRESSURE EUROPE FISCALCONSTRAINTS
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