Countries in the North Atlantic Treaty Organization (NATO) continued to raise defense spending in 2025, with total expenditure expected to exceed $1.4 trillion, according to the alliance's annual report released on Thursday.

The report said European NATO members and Canada sharply increased military spending, with their combined defense outlays reaching $574 billion in 2025, up 20% in real terms from a year earlier.

All NATO members met or exceeded the alliance's longstanding target of spending 2% of gross domestic product (GDP) on defense in 2025, the report said, adding that Poland, Lithuania and Latvia achieved NATO's new target of allocating 3.5% of GDP to core defense spending.

At the summit in The Hague in June 2025, NATO leaders agreed to raise annual defense-related spending to 5% of GDP by 2035. Under the plan, 3.5% would go to core defense needs, while the remaining 1.5% would be allocated to broader security-related areas such as protecting critical infrastructure and strengthening cybersecurity.