COPENHAGEN, Oct 11 (Reuters) - The Danish government wants to raise its defence budget by 20 percent over the next five years in response to Russia stepping up military activity in eastern and northern Europe.

Much of the West has been troubled by Russia’s actions since its 2014 annexation of Ukraine’s Black Sea peninsula Crimea and its support for separatist rebels in eastern Ukraine in a war that has killed more than 10,000 people.

Baltic countries have grown increasingly alarmed. Last year Russia, saying it was part of routine drills, moved ballistic nuclear-capable missiles to its enclave of Kaliningrad on the Baltic Sea and deployed its S-400 air missile defence system there. These missiles are capable of reaching Copenhagen.

Russia dismisses concerns over its defence activities and accused the West of “whipping up hysteria” over recent large-scale military exercises. “Russia is investing heavily in its military and carrying out large-scale military exercises along the Baltic Sea and the Baltic countries’ borders with disregard for international norms and principles,” the government said in a statement on Tuesday.

It said its proposed 20-percent hike of the defence budget should be carried out gradually over a five-year period. The total increase would amount to 4.8 billion Danish crowns ($762 million) by 2023.

In April Denmark said Russia had hacked its defence computer network and gained access to employees’ emails in 2015 and 2016.

The proposed increase will raise Denmark’s defence spending to 1.3 percent of GDP in 2023, up from 1.2 percent last year. NATO, to which Denmark belongs, requires its members to spend 2 percent of GDP on defence annually, though this is an informal target.

Denmark’s centre-right minority government still needs to persuade a majority in parliament.