Sweden sets ambitious defence budget plan, pledging 3.5% of GDP by 2030

Sweden has announced plans to increase its defence spending to 3.5% of its GDP by 2030, marking a sharp rise from the current 2.4%. This decision follows heightened security concerns stemming from Russia’s ongoing war in Ukraine and uncertainties surrounding US commitments to European defence.

Prime Minister Ulf Kristersson unveiled the new defence spending plan on March 26, which has been agreed upon by the four parties supporting his government, Caliber.Az reports, citing foreign media.

The increased spending will largely be funded through borrowing.

“This is the biggest rearmament of Swedish defence since the days of the Cold War,” Kristersson said in a statement to reporters.

The announcement aligns with a broader trend in Europe, where countries are ramping up military expenditure in response to the dual threats posed by Russian aggression and pressure from former US President Donald Trump, who urged European countries to take on a greater share of the defence burden. Several frontline NATO countries, including Estonia, Lithuania, and Poland, have set their own targets for defence spending at 5% of GDP starting next year, reflecting Trump’s aggressive stance on NATO funding.

There is widespread anticipation among diplomats that the upcoming NATO summit in The Hague this summer could see the alliance’s military spending target raised from its current 2% to approximately 3.5%.

Kristersson explained that Sweden’s current defence spending was insufficient, stating, “Our assessment is that NATO — especially European countries in NATO — will have to take a big step forward in the coming years… We are pushing in Europe for a new and higher NATO target to be decided… between 3 and 4%.”

Sweden, a nation that has long prided itself on its 200-year history of peace and neutrality, shifted its stance dramatically following Russia’s full-scale invasion of Ukraine in 2022. Public opinion and political thinking have shifted to such an extent that Sweden joined NATO as its 32nd member last year.

As part of this shift, Sweden has already significantly increased its defence spending after decades of under-investment during the “peace dividend” period. The country has also re-militarised the strategically important Baltic Sea island of Gotland.

Diplomats suggest that Sweden’s primary role in NATO’s new defence strategy for the Nordic and Baltic regions will be to serve as a logistical hub supporting front-line operations elsewhere. However, Sweden’s defence contractor Saab, a company with deep experience in areas such as fighter jets, surveillance planes, and anti-submarine warfare, continues to play a vital role. The country has already deployed troops to Latvia and sent Gripen fighter jets to Poland as part of NATO missions.

To fund this rearmament, Kristersson revealed that Sweden would borrow approximately SEK 300 billion (around $30 billion) by 2035. This move has been endorsed by the three parties in his coalition, as well as the nationalist Sweden Democrats. Thanks to one of the lowest debt-to-GDP ratios in Europe, Sweden has ample capacity to take on additional debt.

By Tamilla Hasanova