Substantial Increase in Defence Spending Required for Canada to Reach NATO’s 5 Percent Target: PBO

Meeting NATO’s defence spending target of 5 percent of GDP by 2035 will require a “substantial and sustained increase” in Canadian defence spending, according to the Parliamentary Budget Office (PBO). “The scale and composition of this increase could have broader implications for the Canadian economy,” the PBO said in an Oct. 6 report on Canada’s defence spending commitments and their implications for the budget and the economy. Canada has committed to raising defence spending to 4 percent of GDP by 2030 and 5 percent by 2035—targets the PBO says could increase the annual federal deficit by $63.7 billion by 2035-36 and add substantially to the federal debt.