Denmark is set to significantly increase its security spending to five percent of its GDP, according to an announcement made by Prime Minister Mette Frederiksen. This decision follows a proposal from NATO Secretary General Mark Rutte for increased defense budgets among member states.

The Danish government plans to allocate 3.5 percent of GDP directly to defense and an additional 1.5 percent to other security measures, such as cybersecurity and border security.

Economists estimate the increased spending could equal the cost of two complete metro constructions annually. Increased spending may reach approximately DKK 90 billion per year.

The final 1.5 percent of the target could be met through investments in infrastructure like roads and ports, which support military transport. The economist Niels Storm Knigge suggests that Denmark already invests in areas that could be counted toward this resilience target.

The government benefits from existing planned investments in the Armed Forces and upgraded public finances. Fiscal headroom provides financial flexibility, potentially avoiding the need for new taxes.

Niels Storm Knigge notes that a recent analysis indicates fiscal headroom could reach DKK 82 billion by 2035, covering the jump to 3.5 percent for direct defense spending.

The Prime Minister acknowledged that the increase in spending will be expensive. She said, “There is just nothing to be done about it, because if we do not have our peace and our security, then we have nothing.”

Peter Viggo Jakobsen from the Defence Academy said that NATO divided the goals for financial contributions to the alliance to meet Southern European countries needs. He supported Niels Storm Knigge’s point that a large part of the 1.5 percent for resilience can be financed by expenses already incurred.