GDP

Herbert Hoover (1929–1933)

Average Annual GDP Growth Rate: -9.3%

President Herbert Hoover had the worst average annual GDP growth rate so far at -9.3%. That’s because in October 1929, during Hoover’s first year of his term, the stock market crashed and led to the Great Depression, the most severe and longest economic recession in modern world history.

Hoover took a laissez-faire (low government intervention) approach in response to the Great Depression and vetoed several bills that would have provided relief to Americans impacted by the recession. He also signed the Smoot-Hawley Tariff Act into law, which raised the costs of important goods and affected trade. The GDP growth rate fell to -12.9% in 1932, while unemployment soared to 25% in 1933.

Franklin D. Roosevelt (1933–1945)

Average Annual GDP Growth Rate: 10.1%

President Franklin D. Roosevelt had an average annual GDP growth rate of 10.1% during his four-term presidency, the highest growth rate of any president so far. FDR introduced a series of government programs known as the New Deal to help stimulate the economy during the Great Depression. The New Deal aimed to maintain infrastructure, create jobs, and boost businesses across the country. The New Deal also included programs such as Social Security.

While the New Deal did help the economy recover and helped reduce income inequality in the United States, some economists question its true impact on the economy and even say it may have prolonged the recession by several years. Critiques of the New Deal say that too much government aid may have hindered the economy’s natural way of rebounding after a deep recession. Still, economists consider 1941 as the end of the Great Depression because GDP increased and unemployment dropped. This was also the year when the U.S. entered WWII.

FDR’s social programs also came with major tax increases and national debt. Roosevelt contributed the largest percentage increase to the U.S. national debt between his New Deal initiatives and, more significantly, spending on World War II.

Harry S. Truman (1945–1953)

Average Annual GDP Growth Rate: 1.4%

President Harry Truman had an average annual GDP growth rate of 1.4%. The economy went through two mild recessions during Truman’s term: one in 1945 due to a drop in government spending after the end of WWII and another from 1948 to 1949 as the economy corrected in the wake of a postwar spending boom.

Truman had the difficult job of transitioning the economy from wartime to peacetime without sending it into a recession, and, in large part, did manage to maintain a healthy peacetime economy. Truman also wanted to extend some of the New Deal’s economic programs, such as a higher minimum wage and housing. Still, only a few of his proposals became law due to facing opposition in CongressTruman’s’s Marshall Plan sent $12 billion to help rebuild Western Europe after WWII, boosting the U.S. economy by creating a demand for American goods. The Korean War began durinTruman’s’s term in 1950, leading to $30 billion in government spending that helped boost economic growth under Truman.

Dwight Eisenhower (1953–1961)

Average Annual GDP Growth Rate: 2.8%

President Dwight D. Eisenhower had an annual GDP growth rate of 2.8%. During his time in office, the economy experienced three recessions, and the Korean War ended in 1953. Eisenhower helped boost economic growth with the Federal-Aid Highway Act of 1956, which aimed to rebuild the country’s interstate highways. The government spent a total of $119 billion on the project.

The economy contracted into a recession again from 1957 to 1958 when the Federal Reserve raised interest rates. However, Eisenhower refused to use fiscal policy to stimulate the economy, instead opting to maintain a balanced budget.

John F. Kennedy (1961–1963)

Average Annual GDP Growth Rate: 5.2%

President John F. Kennedy had an average annual GDP growth rate of 5.2%. Kennedy and his administration helped end the 1960 recession (the fourth major recession since WWII) by increasing domestic and military spending. Kennedy also raised the minimum wage and increased Social Security benefits. 

Lyndon B. Johnson (1963–1969)

Average Annual GDP Growth Rate: 5.2%

President Lyndon B. Johnson had an average annual GDP growth rate of 5.2%. LBJ was sworn in two hours after Kennedy’s assassination and was re-elected in 1964 after getting 61% of the vote.

Johnson increased government spending and pushed through tax cuts and the civil rights bill proposed during Kennedy’s term. Johnson’s Great Society program in 1965 created social programs such as Medicare, Medicaid, and public housing. While the economy grew under LBJ with strong businesses and low unemployment, prices began to rise rapidly, and inflation ticked up. However, Johnson did not raise taxes to curb spending and cool inflation. Johnson also escalated the Vietnam War, which began during his term, but he was unable to end it.

Richard Nixon (1969–1974)

Average Annual GDP Growth Rate: 2.7%

President Richard Nixon had an average annual GDP growth rate of 2.7%. Though Nixon attempted to cool the inflation that began during LBJ’s term without causing a recession, his economic policies caused a period of stagflation that lasted for a decade. This period was a result of double-digit inflation and economic contraction.

Nixon imposed tariffs and wage-price controls, which led to layoffs and slower growth. The value of the dollar also fell during Nixon’s term when he ended the gold standard. The aftermath of Nixon’s economic policies is called the Nixon Shock.

Gerald R. Ford (1974–1977)

Average Annual GDP Growth Rate: 5.4%

President Gerald R. Ford had an average annual GDP growth rate of 5.4%. The economy had contracted and was in a recession from 1974 to 1975 due to stagflation from Nixon’s time. Ford and his administration cut taxes and reduced regulation to stabilize the economy, and ended the recession. However, inflation remained high.

Jimmy Carter (1977–1981)

Average Annual GDP Growth Rate: 2.8%

President Jimmy Carter had an average annual GDP growth rate of 2.8%. Stagflation continued into Carter’s term, and was made worse by an energy crisis that led to soaring gas prices and shortages. Carter deregulated oil prices to stimulate domestic production and also deregulated the airline and trucking industries. The Iranian hostage crisis in 1979, however, led to economic contraction. Carter also had the highest inflation rate among U.S. presidents to date.

Ronald Reagan (1981–1989)

Average Annual GDP Growth Rate: 3.6%

President Ronald Reagan had an average annual GDP growth rate of 3.6%. The economy went into a recession in 1981 after the Fed raised interest rates to 20% in an effort to cool inflation.

Reagan’s economic policies, later known as Reaganomics, aimed to end the recession through decreased government spending, tax cuts, increased military spending, and reduced social spending. While these policies helped bring inflation down, Reagan added over $1.86 trillion to the national debt and made the budget deficit worse. Critics of Reagan’s economic policies also say he widened the nation’s wealth gap, and that his deregulation of the financial services industry may have contributed to the Savings and Loan Crisis in 1989.

George H.W. Bush (1989–1993)

Average Annual GDP Growth Rate: 1.8%

President George H.W. Bush had an average annual GDP growth rate of 1.8%. Bush’s administration had to contend with the fallout of the Savings and Loan Crisis, which unfolded during the 1980s and 1990s and contributed to a recession in 1990–1991. In 1989, Bush agreed to a $100 billion government bailout plan to help banks out of the Savings and Loan Crisis. Bush also raised taxes and cut government spending in an effort to reduce the budget deficit.

Bill Clinton (1993–2001)

Average Annual GDP Growth Rate: 4.0% 

President Bill Clinton had an average annual GDP growth rate of 4%. The economy grew for 116 consecutive months, with 22.5 million jobs created in Clinton’s two terms. Clinton signed the North American Free Trade Agreement (NAFTA) which increased growth by getting rid of tariffs between the U.S., Canada, and Mexico. Clinton also lowered the national debt, creating a budget surplus of $70 billion. Clinton raised taxes on the wealthy and briefly cut government spending to reform welfare.

George W. Bush (2001–2009)

Average Annual GDP Growth Rate: 2.4%

President George W. Bush had an average annual GDP growth rate of 2.4%. Bush’s two terms came with major events such as the 9/11 attacks (2001), Hurricane Katrina (2005), and the 2008 recession. Bush launched the War on Terror by creating and expanding the U.S. Department of Homeland Security (DHS) in response to the 9/11 attacks. Bush also faced the Great Recession in 2008, which was considered the most severe recession since the Great Depression. Bush’s military spending and significant tax cuts in response to the recession added about $4 trillion to the national debt.

Barack Obama (2009–2017)

Average Annual GDP Growth Rate: 2.3%

President Barack Obama had an average annual GDP growth rate of 2.3%. Obama ended the 2008 recession he inherited with the American Recovery and Reinvestment Act (ARRA), an $831 billion stimulus package passed by Congress aimed at cutting taxes, extending unemployment benefits, and improving infrastructure and education. However, Obama is the president who added the most to the national debt, in dollar amounts, with his recession relief measures.

Still, Obama bailed out the auto industry in the U.S. and created 11.3 million new jobs during his two terms. Inflation and interest rates also remained low. He also ended the Iraq War and reduced troops in Afghanistan. Obama’s economic policies, now known as Obamanomics, were controversial at the time, and his role in ending the 2008 recession is still debated.

Donald Trump (2017–2020)

Average Annual GDP Growth Rate: 2.3% 

President Donald Trump had an average annual GDP growth rate of 2.3%. While there were no major wars or recessions during Trump’s presidency, he did face the COVID-19 pandemic in 2020, his last year in office. Trump increased spending and cut taxes, while the Fed raised interest rates in response to Trump’s expansionary fiscal policies.

Trump placed import taxes on products from China, particularly steel and aluminum, to boost sales of American-made products. However, it hurt the sales of American exports instead, as China responded by placing tariffs on products it imported from the U.S. It also increased costs for American consumers. 

The economy went into recession with the onset of the COVID-19 public health crisis in March 2020 as businesses closed down and Americans sheltered in place. The recession was short but severe, and the Trump administration responded by declaring a state of emergency and passing a $2 trillion stimulus package called the CARES (Coronavirus Aid, Relief, and Economic Security) Act. The CARES Act provided relief for businesses and individuals through stimulus payments and a pause on student loan payments, among other measures, but it was not enough to pull the economy out of the pandemic-induced recession.

Joe Biden (2021–2025)

Average Annual GDP Growth Rate: 3.2%

President Joe Biden had an annual average GDP growth of 3.2%, with a cumulative real GDP increase of 12.6% over his term, highlighted by a 5.7% growth in 2021. Biden took office in the middle of the COVID-19 pandemic and signed the American Rescue Plan Act in 2021, which was a $1.9 trillion stimulus package to provide economic relief from the pandemic.

While the recession caused by the pandemic was severe, it was short-lived. However, it was followed by record-high inflation, partly due to the Russian invasion of Ukraine, which caused soaring gas prices in 2022, supply chain snarls, higher demand for goods, and increased consumer spending from federal stimulus checks. The Federal Reserve responded by raising interest rates 11 times in an attempt to cool inflation. In July 2024, inflation cooled to 2.9%, and the Fed signaled a rate cut.

How Does the President Impact GDP?

Since GDP is the most popular way to measure economic growth, it can show us how the economy performed under each U.S. president. The economy’s performance under a president is an important factor that voters consider when evaluating a president’s time in office. Additionally, economic policies are one of the primary issues that presidents address during their campaigns.

Presidents indeed play a role in determining GDP. The president and Congress set fiscal policy to help direct the economy. The executive and legislative branches, for instance, can lower taxes and increase government spending to boost the economy, or do the opposite.

While the president plays an important role in guiding the economy, external factors that can slow down the economy—such as wars, recessions, or public health crises—also significantly impact the economy and can be out of the president’s control. In addition, the Federal Reserve—which is independent of the federal government—sets monetary policy, which influence the economy as well.

The Bottom Line

Looking at GDP growth is one of the most widely used measures of economic growth, as it is considered one of the most accurate economic indicators. Since a president’s economic policies can have a significant impact on GDP, it can be used as a way to examine how the economy did under each U.S. president.

However, it is essential to remember that certain economic events, such as severe recessions, natural disasters, public health crises, and other catastrophic events, can significantly impact the economy and have little to do with who is in office. Still, the way a president, along with the central bank, sets and enacts monetary policy in response to such events also influences the economy.

Aug. 28 (UPI) — The U.S. gross domestic product was revised slightly upward, according to the second estimate released by the U.S. Bureau of Economic Analysis Thursday.

The GDP, which is a measure of all goods and services produced in the American economy, rose to an annualized rate of 3.3% from April to June instead of its earlier estimate of 3%, the BEA said.

The new estimate still shows a sharp rebound from the first quarter, which was down 0.5%.

Consumer spending was revised up to a 1.6% annualized rate in the latest estimate, up from the 1.4% previously reported. Spending is about two-thirds of the U.S. economy.

“With the initial brunt of the tariff shock behind us and the economy losing momentum, we expect to see sub-1% GDP growth in the second half of the year,” said Oren Klachkin, financial markets economist at Nationwide, in an analyst note Thursday, CNN reported. “A weakening labor market and modestly higher tariff-induced inflation will constrain activity through year-end.”

The change in real GDP mostly reflects upward revisions to investment and consumer spending that were partly offset by a downward revision to government spending and an upward revision to imports, the BEA said.

Real final sales to private domestic purchasers, which is the sum of consumer spending and gross private fixed investment, increased 1.9% in the second quarter, revised up 0.7% from the previous estimate.

The price index for gross domestic purchases rose 1.8% in the second quarter, revised down 0.1% from the previous estimate. The personal consumption expenditures price index increased 2%, revised down 0.1% from the earlier estimate. Excluding food and energy prices, the PCE price index rose 2.5%, the same as estimated.

THE UK’s economy grew in the three months to June but slowed on the first quarter of the year.

The latest figures from the Office for National Statistics (ONS) reveal Gross Domestic Product (GDP) grew by 0.3% between April and June.

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This is lower than the 0.7% recorded between January and March, but stronger than expected by analysts.

GDP grew in the second quarter of the year mostly due to the services and construction sectors.

It’s worth bearing in mind these latest quarterly figures are estimations and are open to be revised at a later date.

Liz McKeown, director of economic statistics at the ONS, said: “Growth slowed in the second quarter after a strong start to the year.

“The economy was weak across April and May, with some activity having been brought forward to February and March ahead of Stamp Duty and tariff changes, but then recovered strongly in June.

“Across the second quarter as a whole growth was led by services, with computer programming, health and vehicle leasing growing.

“Construction also increased while production fell back slightly.

“Growth for the quarter was also boosted by updated source data for April, which while still showing a contraction, was better than initially estimated.

“Services also drove growth in June with scientific R&D, engineering and car sales all having a strong month.

“Within production, which recovered, manufacture of electronics performed especially well.”

The data today was largely expected by analysts to show the UK economy slowed to just 0.1% growth in the second quarter of 2025 after a strong start to the year.

Last Thursday, the Bank of England forecast second-quarter UK GDP growth of 0.1%, slowed from 0.7% in the first quarter.

Figures have already shown that GDP contracted by 0.3% in April and 0.1% in May.

Plus, figures on Tuesday showed the UK jobs market weakened again, but overall wage growth remains strong, prompting traders to trim their bets on the possibility of another Bank of England rate cut this year.

What it means for your money

GDP measures the economic output of companies, individuals and Governments.

If it is rising steadily, but not too much, it’s a sign of a healthy and prosperous economy.

This is because it usually means people are spending more, the Government gets more tax and businesses get more money which then means pay rises for workers.

When GDP is falling, it means the economy is shrinking which can be bad news for businesses and workers who face pay cuts or even losing their job.

The Bank of England (BoE) also uses GDP and inflation as key indicators when determining the base rate.

This decides how much it will charge banks to lend them money and is a way to try to control inflation and the economy.

If GDP is low, the BoE cuts its base rate in order to encourage people to spend and invest money.

If it is higher, the BoE may keep its base rate higher in order to keep inflation in check.

July 14 (UPI) — The 50% tariffs proposed by Donald Trump could cut Brazil’s gross domestic product by between 0.3 and 0.8 percentage points in 2025, according to Brazilian economists and consulting firms.

The final impact will depend on how Luiz Inacio Lula da Silva‘s administration responds and whether Brazil can redirect its exports.

Brazil’s annual export loss could range from $12 billion to $17 billion, representing 3.6% to 5% of the country’s total exports, according to Rogério Marin, CEO of Tek Trade and president of the Foreign Trade Companies Union of Santa Catarina, in comments to the Brazilian digital outlet Agricultura y Negocios.

Marin estimates an annual negative impact on GDP of between 0.6% and 0.8%.

According to XP, one of Brazil’s major investment and financial services firms, the tariffs could reduce GDP growth by 0.3 percentage points in 2025 and 0.5 percentage points in 2026, with Brazilian exports to the United States projected to fall by $6.5 billion in 2025 and $16.5 billion the following year.

Agribusiness firm FGVAgro said in a statement that the proposed 50% tariff would particularly impact the agricultural sector, which accounts for 30% of exports to the U.S. market.

“Food exports are estimated to fall by as much as 75%, which could cause a contraction of up to 0.41% in Brazil’s GDP. Domestic consumption is also projected to decline by as much as $13 billion,” the firm said.

Brazil’s National Confederation of Industry, or CNI), and other business groups have urged a diplomatic resolution. “A rupture in the relationship with the United States would cause serious harm to our economy,” said Ricardo Alban, president of the CNI, who called for “intensifying negotiations to reverse this decision.”

The American Chamber of Commerce for Brazil, Amcham Brasil, has urged avoiding a trade war, saying it “has no winners.” The group argues that the arbitrary imposition of tariffs serves neither side’s interests and instead creates uncertainty that discourages investment and economic growth.

Brazil maintains a strong trade relationship with the United States, exporting about $41 billion annually, primarily in industrial and agricultural goods. That volume represents roughly 1.7% of Brazil’s GDP.

“Brazilian industry — especially manufacturing — has broken export records to the United States in recent years, underscoring the importance of maintaining a stable trade environment,” said Marcos Santos Carena, director of the Business Observer, a consulting firm that operates in Brazil, Colombia and the United States.

The announced tariffs could significantly impact several sectors of Brazil’s economy. Experts warn that about 40% of the affected exports are manufactured goods with limited potential to be redirected to other markets.

The agricultural and agribusiness sectors could be among the hardest hit, as the United States is a key market for products such as coffee and orange juice. One-third of the coffee and half of the orange juice consumed in the United States comes from Brazil, Santos Carena said. Other agricultural exports could also be affected.

In the aerospace sector, Embraer — the Brazilian aircraft manufacturer — has been identified as one of the companies that could be hit hardest, with sharp declines in its market value. The tariffs could hurt the competitiveness of its exports to the United States.

Brazil’s steel and aluminum industries are already subject to additional tariffs, and a new 50% levy would make these exports unviable, according to industry representatives.

Although the United States accounts for a small share of Brazil’s mining exports — about 4% — the tariffs could affect sales of gold, natural stones, ornamental rocks, iron ore, kaolin and niobium.

Other exports that could be affected include engines and generators, parts for industrial machinery, data processing equipment, measuring instruments, wood and forest products — such as pulp and fiberboard — and meat.

In a meeting lasting more than four hours at the Palácio da Alvorada on Sunday, Lula convened his cabinet ministers — including those from finance, industry, agriculture, and foreign affairs — along with the Central Bank president and Senate leaders to coordinate a response to the tariffs announced by President Donald Trump.

Among the agreed measures was the creation of a committee led by Vice President Geraldo Alckmin. The group, which includes business leaders, will bring together affected sectors to develop joint proposals and advise the president before any official announcement.

The government pledged to issue a decree by Tuesday outlining legal and technical criteria for triggering countermeasures if the U.S. tariffs take effect Aug. 1, as Trump promised.

While officials have not ruled out reciprocal action, Lula’s administration said its priority is negotiation, multilateral diplomacy — through channels such as the World Trade Organization — and non-tariff solutions.

June 25 (UPI) — Following a summit of the North Atlantic Treaty Organization in The Hague Wednesday, the alliance announced its member nations have agreed to each invest 5% of their Gross Domestic Product toward defense.

“This is a significant commitment in response to significant threats to our security,” NATO Secretary General Mark Rutte said in a press conference.

Rutte said the 5% breaks down to 3.5% of each country’s GDP invested in “core defense requirements” such as tanks, drones, ammunition and troops, among other items. The 1.5% remainder is to go into investments that will strengthen defense.

“All to ensure we can effectively deter aggression and defend ourselves, and each other, should anyone make the mistake of attacking,” Rutte added.

The previous financial benchmark for NATO was 2%, which has either been met or is expected to be met this year by all members.

“It means that no matter the challenges we face — whether from Russia or terrorism, cyberattacks, sabotage or strategic competition — this Alliance is and will remain ready, willing and able to defend every inch of Allied territory, said Rutte. “And ensure that our one billion people can continue to live in freedom and security.”

Rutte’s statements followed the meeting Wednesday, during which U.S. President Donald Trump reassured NATO allies Wednesday that the United States was fully committed to the defense alliance’s so-called Article 5 under which members pledge to come to the military defense of any NATO country that is attacked.

“We’re with them all the way,” Trump told a joint briefing with Secretary General Mark Rutte at a NATO summit in The Hague, responding to a question on his commitment to NATO and the mutual defense pact at its heart.

Trump added that he was happy to commit because other members of the 32-country alliance had heeded his long-standing call to ramp up their defense budgets and would now meet his demand that they spend 5% of GDP on defense.

“If you look at the numbers, I’ve been asking them to go up to 5% for a number of years and they’re going up to 5%. That’s a big jump from 2% and a lot of people didn’t even pay the 2%, so I think it’s going to be very big news. NATO is going to become very strong with us and I appreciate doing it,” he said.

Earlier, Trump sparked consternation after comments made mid-Atlantic aboard Air Force One on Tuesday that his commitment to Article 5 “depends on your definition.”

The situation in the Middle East dominated most of the rest of the briefing, setting the tone for a gathering that alternated between shows of NATO unity and discussion of the U.S. strikes on Iran and how the situation would play out, despite not being on the agenda.

That left little room for the issue of Ukraine, which was relegated well down the agenda.

In his opening remarks to the leaders’ session Rutte did set out the challenges facing NATO, from Russia’s war on Ukraine and China’s “massive” military build-up to conflict in the Middle East, but hailed what he said were the historic, transformative decisions that would be made at the meeting to “make our people safer through a stronger, fairer and more lethal NATO.”

He said the additional funds from the 5% spending commitment would go toward bolstering “core” hard defense expenditure, as well as defense and security-related investments, and ensure every country contributed their fair share to the security umbrella NATO provided.

“For too long, one Ally, the United States, carried too much of the burden of that commitment. And that changes today,” Rutte said.

“President Trump, dear Donald, you made this change possible. Your leadership on this has already produced $1 trillion in extra spending from European Allies since 2016. And the decisions today will produce trillions more for our common defenses, to make us stronger and fairer by equalising spending between America and America’s allies.”

Shortly after the meeting ended, the NATO heads of state and government issued a joint communique reaffirming their commitment to NATO, the transatlantic bond and “ironclad commitment to collective defense as enshrined in Article 5” of the 1947 Washington Treaty.

“An attack on one is an attack on all.”

It said the leaders were united in the face of “profound security threats and challenges”, in particular the long-term threat posed by Russia to Euro-Atlantic security and the persistent threat of terrorism allies had therefore committed to invest 5% of GDP in defense annually by 2035.

“Our investments will ensure we have the forces, capabilities, resources, infrastructure, warfighting readiness, and resilience needed to deter and defend in line with our three core tasks of deterrence and defence, crisis prevention and management, and cooperative security,” the declaration stated.

Members also reaffirmed a joint pledge to accelerate efforts to ramp up transatlantic defense-industrial cooperation, harness new technology and embrace out-of-the-box thinking on defense, as well as working to remove defense trade barriers between allies.

Prime Minister Sir Keir Starmer has pledged to meet a new Nato target to spend 5% of the UK’s GDP on national security by 2035.

At a Nato summit in the Netherlands, 32 member countries including the UK are expected to agree the 5% goal, with 3.5% to go on core defence and the remaining 1.5% on defence-related areas such as resilience and security.

The split target is aimed at placating US President Donald Trump, who has urged Nato allies to spend more, while giving cash-strapped EU countries flexibility over how they meet the target.

Downing Street has argued measures on energy and tackling smuggling gangs could be classified as security spending.

Speaking ahead of the two-day summit, Sir Keir said the UK had to “navigate this era of radical uncertainty with agility, speed and a clear-eyed sense of the national interest”.

“After all, economic security is national security, and through this strategy we will bring the whole of society with us, creating jobs, growth and wages for working people.”

Nato (the North Atlantic Treaty Organisation) is made up of 32 member countries who agree to defend each other if attacked.

Since Russia’s invasion of Ukraine in 2022 and Trump’s re-election as US president last year, members of the organisation have faced increased pressure to boost their defence spending.

Countries had been expected to spend at least 2% of their national income – or GDP – on defence, although last year, only 23 hit that target – an increase from three in 2014.

In January, Trump said 2% was “not enough” and that Nato allies should be spending 5%.

And speaking last year before his re-election, he said he would “encourage” aggressors to “do whatever the hell they want” to European allies who don’t pay their way.

In February, Sir Keir set out plans to increase the UK’s defence spending, as opposed to national security spending, to 2.5% by April 2027 and expressed a “clear ambition” to reach 3% by 2034 if economic conditions allowed.

On Monday, the government said it expected to reach the target of spending 4.1% of GDP on national security by 2027.

The 1.5% element of the 5% Nato target is for what is described as “resilience”, such as border security and protection against cyber attacks.

For the UK, this latter element is expected to be met by the year after next, with core defence spending reaching 2.6% by then.

Getting core defence spending to 3.5% isn’t expected until 2035 – two general elections away – and Downing Street hasn’t said how it will be paid for.

Alongside the spending commitment, the government published its National Security Strategy which said the UK needed to be more “competitive and robust” in science, education, trade and frontier technology.

It also sought to stress that investment in defence would be felt “directly in the pockets of working people” pointing to new jobs that would be created.

The summit will be Mark Rutte’s first as secretary general of Nato. Speaking at a press conference on Monday, the former Dutch prime minister said the 5% spending commitment was “a quantum leap that is ambitious, historic and fundamental to securing our future”.

However, it is unclear how nations will meet the target or whether they will at all.

On Sunday evening, Spain claimed it had secured an opt-out, something later denied by Rutte.

Ukraine is not a member of Nato and although President Volodymyr Zelensky has been invited to the summit dinner he will not be taking part in discussions of the North Atlantic Council.

Last week, Ed Arnold from the defence think tank Rusi told the BBC contentious issues – including a new Russia strategy – had been removed from the summit’s agenda.

THE UK economy shrunk in April and by more than expected, official figures show.

The Office for National Statistics (ONS) said Gross Domestic Product (GDP) went down by 0.3% that month.

Services and manufacturing both contributed to the fall.

However GDP still grew over the last three months as a whole, with signs that some activity may have been brought forward from April to earlier in the year.

The figures likely reflect the impact of huge tariffs imposed by US President Donald Trump.

Experts had warned the tariffs could put a dampener on UK sectors including car and steel manufacturers.

It comes after the economy grew by 0.7% in the quarter to March.

At the time, it had grown more than expected.

Shadow business secretary Andrew Griffith said: “It’s bad news that growth has fallen but when you introduce a £25billion jobs tax, hike business rates, drive investors overseas and spawn hundreds of pages of extra red tape, lower growth is precisely what you get.

“You can’t tax and spend your way to growth.”

PM Albanese says government already increasing spending and decisions will be based on defence capability needs.

United States Defense Secretary Peter Hegseth has called on Australia to increase its military spending to 3.5 percent of gross domestic product (GDP) “as soon as possible”.

Responding on Monday, Prime Minister Anthony Albanese said the government will decide on Australia’s defence capability needs before announcing spending.

“What you should do in defence is decide what you need, your capability, and then provide for it,” Albanese told reporters.

“That’s what my government is doing. Investing to our capability and investing in our relationships.”

Albanese added that his government is already increasing defence spending by about 10 billion Australian dollars ($6.5bn).

“We’re continuing to lift up,” he said, citing his government’s goal to increase spending to 2.3 percent of GDP by 2033.

However, the government is facing other demands on its budget.

Albanese was speaking from a farm in the state of South Australia, which is experiencing a significant drought.

Meanwhile, Australia’s treasurer said the country is facing a bill of billions due to recent floods in New South Wales and Cyclone Alfred.

Public broadcaster ABC reported that increasing military spending to 3.5 percent of GDP would cost 100 billion Australian dollars ($65bn) annually, 40 billion Australian dollars ($25bn) more than it spends currently.

Matt Grudnoff, a senior economist with The Australia Institute, said “Australia already spends more than it should” on defence.

“Were Australia to increase its defence spending to 2.3% of GDP, we would be the ninth biggest spender on defence and the military,” Grudnoff said.

“Australia would be devoting more of its economy to defence than France and Taiwan, and on a par with the United Kingdom,” he added.

Worldwide military spending increased by 9.4 percent in 2024, the sharpest rise since the end of the Cold War, in part driven by increased spending by European countries, according to the Stockholm International Peace Research Institute (SIPRI).

The Australian government has already committed to spending hundreds of billions of dollars on US-manufactured nuclear submarines under its AUKUS agreement with the US and the UK in the coming decades.

It estimates that the programme could cost up to 368 billion Australian dollars ($238bn).

Hegseth and Australian Defence Minister Richard Marles discussed security issues, including accelerating US defence capabilities in Australia and advancing industrial base cooperation during a meeting on Friday, a Pentagon statement said on Sunday.

Australia’s role in manufacturing weapons components has come under increasing scrutiny amid Israel’s war on the Gaza Strip, with protests outside Australian weapons factories and at Australian ports, as well as legal challenges.

Albanese says Australia’s position on Taiwan has not changed

Hegseth’s call for Australia to increase its military spending comes after the US Secretary of State Marco Rubio told the Shangri-La Dialogue on Saturday that “the threat China poses is real, and it could be imminent”.

“There’s no reason to sugar-coat it,” the Pentagon chief added. The US continues to warn of the threat that China poses to Taiwan, which Beijing considers part of Chinese territory.

China’s Defence Minister Dong Jun skipped the conference, which is considered to be the region’s top security event.

The Chinese Ministry of Foreign Affairs responded by saying: “The US should not entertain illusions about using the question over Taiwan as a bargaining chip to contain China, nor should it play with fire.”

Asked about Hegseth’s remarks, Albanese said Australia will “determine our defence policy”.

“Our position with regard to Taiwan is very clear, [and] has been for a long period of time, which is a bipartisan position to support the status quo,” he said.

May 27 (UPI) — NATO Secretary-General Mark Rutte said that he expects alliance members to agree during next month’s summit to a defense spending target of 5% of gross domestic product.

Rutte made the revelation during the sixth and final day of the NATO Parliamentary Assembly in Dayton, Ohio.

“I assume that in The Hague we will agree on a hard defense spend target of 5%,” he said.

“Let’s say that this 5%, but I will not say what is the individual breakup, but it will be considerably north of 3% when it comes to the hard spend and it will be also a target on defense-related spending.”

“We need this, because otherwise we can never, ever, ever reach the capability targets,” he added.

All NATO members have agreed to spend at least 2% of their GDP on defense by 2025, with no country yet reaching the 5% threshold.

NATO spending by member nations has long been an issue of contention for U.S. President Donald Trump, who has called for European nations to pay more, accusing them of relying on Washington for their defense.

Since returning to the White House in January, Trump has been calling for NATO members to increase defense spending to 5%.

Of the 32 NATO nations, Poland spent an alliance-high 4.12% of GDP on defense last year, according to statistics from the security alliance, with Estonia second at 3.43% and the United States third at 3.38%.

Eight countries spent below the 2% GDP on defense last year, with Spain coming in last at 1.28% GDP.

The NATO Summit is to be held in The Hague from June 24-25, where world leaders and defense chiefs of alliance members will congregate to discuss pressing security issues and decide on the alliance’s strategic direction.