Europe’s defense spending on the rise amid geopolitical shifts
European governments have initiated unprecedented defense spending measures in response to geopolitical pressures. The European Commission and the EU’s foreign policy chief have outlined a Defence Readiness Roadmap 2030, which aims for Europe to be prepared to deter threats and act independently when necessary. The roadmap envisions substantial funding for defense initiatives, with plans for flagship projects such as a European Air Shield, a Drone Defence Initiative, and a Space Shield. Current forecasts predict an increase in defense budgets among EU members from €218 billion in 2021 to €343 billion in 2024, reaching €392 billion by 2025. Notably, defense investment surged by 42%, with €106 billion allocated for procurement reaching €800 billion.
Despite these figures, there remains a significant challenge: “less than half of defense equipment is procured within the EU,” with rising market shares for non-European suppliers. A report released by the International Institute for Strategic Studies indicated that the share of EU-sourced equipment has dropped from 62% in 2022 to just 44% in 2023, with increased purchases from the US, South Korea, Israel, Brazil, and the UK.
The Defence Readiness Roadmap emphasizes the need for EU member states to “invest more, invest together, and invest European,” aiming for 55% of defense investment to be sourced from the European Defence Technological and Industrial Base by 2030. Additionally, the plan seeks to ensure that 35% of all investments come through joint procurement to address fragmentation in national buying.
Through the Commission’s ReArm Europe agenda, up to €800 billion could be mobilized this decade, leveraging the SAFE instrument, which has already secured €150 billion, alongside a proposed €131 billion defense window in the next EU budget. Achieving NATO’s new spending goal of 3.5% of GDP by 2035 could result in an additional €288 billion annually across the bloc.
Belgium, while maintaining a modest role, plans to invest €34 billion by 2034, primarily balancing purchases of US-made F-35 jets with participation in joint EU naval and cyber projects. Coordination via the SAFE fund and future European Defence Industry Programme may facilitate smaller countries to procure European-made defense solutions without sacrificing operational efficiency.
Test ahead
The roadmap also urges member states to align their commitments with contractual obligations and accept enhanced European oversight in exchange for shared funding. If the plan succeeds, the EU could finally leverage its economic strength towards military capabilities. Conversely, failure to redirect substantial funding towards European production may exacerbate dependence on external suppliers from the US, Israel, and Asia.
Germany’s European Sky Shield Initiative and emerging joint projects on air defense and armored vehicles indicate progress, yet the aerospace sector remains largely dominated by American firms, which account for nearly 60% of EU contract values. Without decisive action to focus spending on local production, Europe’s rearmament efforts risk benefiting foreign industries more than its own.
Funding flows rapidly; the challenge will be ensuring that they cultivate a robust domestic defense industry in Europe.
As the landscape shifts, the stakes for self-sufficiency in defense grow increasingly significant.