Germany's Chancellor Olaf Scholz has rejected a demand from United States President-elect Donald Trump that members of the NATO military alliance should increase their defense spending to at least 5 percent of their gross domestic product.

According to figures published by NATO in June 2024, a record 23 out of 32 member states hit the current GDP military spending target of 2 percent, with Germany being one of four countries to do so for the first time.

The US spends around 3.37 percent of GDP on defense, which statistics from the Stockholm International Peace Research Institute say accounts for 68 percent of NATO's funding, as opposed to Europe's combined 28 percent.

In a speech earlier this month, Trump said, "Europe is in for a tiny fraction of the money that we're in (for)… Why are we in for billions and billions of dollars more money than Europe?"

But Scholz, who is facing domestic economic problems while fighting an election campaign, said such a figure was totally out of reach.

"Five percent would be over 200 billion euros ($205 billion) per year — the federal budget is not even 500 billion euros," he told a campaign rally. "That would only be possible with massive tax increases or massive cuts to many things that are important to us."

There is some support for increased spending among European politicians, though, with Sweden's Foreign Minister Maria Malmer Stenergard saying, "US governments have long urged European countries to increase their defense spending and to bear more of their own defense costs. We share this view."

Even Scholz's own Defense Minister Boris Pistorius has said he would like to see more funding for Germany's military.

'Top priority'

"Increasing the war capability of the (army) in the coming years is the top priority of the hour," he said.

"We will continue on this path in 2025 … And we know that in the following years, we will have to invest even more in our security. Two percent can only be the beginning. It will have to be significantly more if we want to continue at the pace and to the extent that we have to."

Poland is the biggest relative individual contributor, spending 4.2 percent of its GDP on the military in 2024, a figure that will rise to 4.7 percent in 2026, and countries close to Russia, such as the Baltic states and Finland, are among the other higher contributors.

In an interview with the Financial Times newspaper, Poland's Defense Minister Wladyslaw Kosiniak-Kamysz called Trump's words an "important wake-up call".

"He should not be criticized for setting a really ambitious target because otherwise, there will be some countries that will continue to debate whether more spending is really needed," he added.