Britain is meeting NATO's target of spending 2% of its GDP on defence, according to the military alliance.
The announcement came amid a row sparked by a think tank that the UK was not matching the said target, a claim firmly denied by the Ministry of Defence.
The International Institute for Strategic Studies estimated last year's figure to be 1.98% - meaning the Government would be narrowly breaching its commitment to the NATO target.
Speaking in Brussels, NATO's secretary general Jens Stoltenberg revealed that both European members and Canada had between them increased defence spending by 3.8% above inflation last year.
Mr Stoltenberg said the figures were "significantly higher than what we had originally foreseen" and showed Nato had "turned a corner" after many years of steep cuts in spending.
A national breakdown is due to be released later this year.
Another NATO official later said: "According to our calculations, five allies, including the United Kingdom, currently meet or exceed Nato's 2% spending benchmark for 2016."
The 1.98% figure was contained in the IISS annual Military Balance report, unveiled a day before a meeting of Nato defence ministers, including the UK's Sir Michael Fallon, in Brussels.
The MOD branded that figure "wrong," adding that it had the "biggest" defence budget in Europe and the "second largest" in NATO.