Draft 2027 budget: defence effort of 2.1% of GNI, about €1.37bn; army budget up 14%

Luxembourg's draft state budget for 2027 plans a defence effort of 2.1% of gross national income (GNI), about €1.373 billion. Defence Minister Yuriko Backes presented the defence part of the draft and the 2026–2030 multi-year programme to MPs on the Chamber's Defence Committee, the Chamber of Deputies reports. It is a proposal: the government tabled the budget bill (no. 8800) on 7 October, and it is still in committee, not adopted.

The share is then set to rise to 2.2% of GNI in 2028 (€1.513 billion) and 2.3% in 2029 (€1.665 billion), with an indicative 2.4% for 2030, about €1.837 billion. The benchmark is the commitment NATO members made at their summit in The Hague in June 2025: 5% of GDP for defence by 2035, of which 3.5% for core defence and 1.5% for defence- and resilience-related spending. For Luxembourg the reference is GNI; Backes said lower GNI estimates had made the budget harder to draw up.

Of the €1.373 billion, €1.098 billion falls directly under Defence: €251.1 million for the Directorate of Defence, €226.5 million for the army and €621 million of spending from the military equipment fund. The rest is spending by other ministries and administrations, including the police, customs and the public buildings administration.

The army's own budget is only part of that total: it rises by 14%, from €198 million in 2026 to €226.5 million in 2027. The increase is driven mainly by the priority given to recruitment, and also by rebuilding stocks of spare parts and ammunition as equipment prices rise. Backes acknowledged that recruitment, including for the binational Belgian-Luxembourg battalion, is a challenge. The Directorate of Defence's budget, by contrast, falls by 6%, from €266 million to €251.1 million.

The military equipment fund is to receive €568.7 million in 2027. It finances major projects such as the GovSat-2 satellite (€89 million for Defence's own needs), the MRTT tanker aircraft programme (€33 million), the Belgian-Luxembourg battalion (€220.7 million) and counter-drone equipment (€10.2 million in 2027). At least €80 million is planned for support to Ukraine in 2027, which could rise to €100 million.

The Defence Ministry is working with the ministries of the Economy, Foreign Trade, and Higher Education and Research so that the spending also benefits Luxembourg's economy, with the aim of bringing local companies into the value chain of each contract. All figures are planned: the Chamber of Deputies has yet to vote on the budget.