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Britain’s Defence Ministry has denied reports from a think tank that the country failed to meet its 2 per cent NATO defence spending target in 2016.

Britain fell short of the target, spending 1.98 per cent of GDP on defence, according to calculations from the Military Balance report from the International Institute for Strategic Studies (IISS).

The spokesperson from the Ministry of Defence (MoD), who spoke on condition of anonymity, said the figures were wrong. “NATO’s own figures clearly show that the UK spends over 2 per cent of its GDP on defence.

“Our defence budget is the biggest in Europe, the second largest in NATO.

“It is growing each year as we invest 222 billion dollars in new equipment and the UK steps up globally, with new ships, submarines and aircraft over the next decade,’’ he said.

Only two European NATO member states cleared the bar, according to the IISS calculations – Estonia at 2.2 per cent and Greece at 2.4 per cent. The IISS calculated that 38.3 billion pounds were spent by Britain on defence in 2016.

It said that spending on defence was not increasing at the same rate as GDP growth, which it credited for the shortfall.

According to NATO figures published in July, the country was on track to spend 41.9 billion pounds on defence – 2.21 per cent of GDP.

The IISS attributed the discrepancy in the calculations to the figures used, as the IISS uses IMF figures to calculate GDP, whereas NATO uses European Commission and OECD data.

Furthermore, NATO’s inclusion of pensions and research and development costs in its calculation does not reflect real deployable capabilities, the IISS argues.

The MoD said that the IISS figures would have been affected by fluctuations in exchange rates as they present defence spending in dollars, thereby “skewing the true picture.”

The release of the new figures comes after weeks of British Prime Minister Theresa May stressing the importance of NATO.

May encouraged EU leaders to “deliver their commitments” on defence spending at an EU summit in Malta last month “so that the burden is more fairly shared.”

As the first world leader to meet President Donald Trump after his inauguration, she reported back that the U.S. president had assured her he was “100 per cent supportive of NATO.

She said that Trump vowed his support despite his comments criticising the alliance and the financial contribution of some members.

Meanwhile, NATO Secretary General Jens Stoltenberg said that Britain had achieved its 2 per cent target.

Stoltenberg said that Canada and European members of NATO have increased defence spending by 3.8 per cent in 2016 compared to the previous year. He said that it has exceeded a previous estimate of a 3 per cent increase.

Speaking the day before a meeting of NATO defence ministers, Stoltenberg welcomed the unexpected rise in defence spending, which amounts to 10 billion dollars.

However, he urged countries to continue to invest, echoing a core demand of the new US administration.

According to NATO, only the U.S., Greece, Britain, Estonia and Poland meet the 2 per cent defence spending target.

Stoltenberg said that the increase in defence spending in 2016 was “an important step in the right direction,” while noting that it was “not enough.”

“We still have a long way to go,” Stoltenberg said.

Stoltenberg said that defence ministers were looking forward to welcoming new U.S. Secretary of Defence Mattis at the meeting on Wednesday and Thursday.

He said that the defence spending will be one of the main issues to be discussed at the meeting.

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