Spain’s government has stressed the need for “a more ambitious and bolder European budget” suggesting it should reach “at least” 2% of annual GDP due to the complex geopolitical environment after Donald Trump's return to power.

Prime Minister Pedro Sánchez's coalition has proposed a strategic plan urging the European Union to double its budget to tackle challenges such as Trump's trade policies and defence concerns better.

Sánchez is advocating for the EU to hike its spending “at least to an annual amount of 2% of GDP,” and according to local reports, the PM may soon present his ‘European Compass’ to EU officials and his partners in Brussels.

Madrid aims to boost European resilience against Trump's harsh measures, such as tariffs of 25% on steel and aluminium imports, which also impact the EU.

The objective is to enhance the EU's competitiveness, especially against China and the United States, to better navigate the challenges of ecological and digital transitions, Euractiv reports.

“Security and defence, but also the fight against climate change, energy interconnections, technological development and scientific programmes, are European issues and, as such, require European funding. The reports by (Mario) Draghi and (Enrico) Letta have already pointed in this direction”, according to the statement.

The Draghi report, presented by former European Central Bank president Mario Draghi in September last year, highlights the need for significant investment to digitise and decarbonise the EU economy, as well as to enhance its defence capacity.

It estimates that around €800 billion annually will be required to maintain competitiveness with the US and China.

Meanwhile, Madrid highlights that the defence sector, another key area, requires increased funding, not just due to direct military threats like the war in Ukraine, but also in response to emerging challenges to European security.

“European security is not only about military threats. It is also cyber-attacks, climate change, terrorism and the fight against mafias and drug trafficking. These aspects require other types of interventions and resources that are not military”, according to Sánchez's government.

Spain currently allocates 1.8% of its GDP to defence and has pledged to increase it to 2% by 2029. However, this is still far from the 5% that Trump is requesting from NATO allies.

In order to meet the goals outlined in the document, Spain proposes the establishment of a “joint debt mechanism” and requests that the debt from the European Next Generation funds be refinanced for an additional 10 years to allow for continued “major investments,” according to the statement cited by the media.