PARIS — European Union countries have significantly ramped up their defense spending, with expenditures reaching a historic €279 billion ($293 billion) last year, marking a 10% increase. The latest report from the European Defence Agency (EDA) indicates that the proportion of military budgets allocated to new equipment has climbed to its highest level since the EDA began tracking this data nearly two decades ago.
In 2022, the collective defense investments of the EU’s 27 member states amounted to €72 billion, which represents 26% of their total defense expenditures. Notably, spending on the development and procurement of military resources surged 19% compared to the previous year, totaling approximately €61 billion.
The EDA anticipates further growth in defense expenditure for 2024, projecting it to reach €326 billion, with the share dedicated to defense investments potentially escalating to a record 31%. This year, procurement spending alone is expected to exceed €90 billion. This aggressive increase in military expenditure is largely in response to Russia’s ongoing military aggression against Ukraine, prompting EU member states to enhance their military capabilities to address stock deficiencies and prepare for potential high-intensity conflicts.
The agency underscored that the resurgence of full-scale warfare in Europe and the concerted efforts by member states to bolster defense capabilities have directly contributed to a significant rise in spending over the past year. Total defense spending in the EU has now increased for nine consecutive years, climbing nearly €100 billion since 2014, when defense budgets witnessed significant cuts following the 2008 financial crisis.
However, the push for rapid procurement of commercial off-the-shelf equipment in addressing immediate capability shortfalls may have temporarily hindered the progress of common European procurement initiatives, which are often complex and time-consuming, according to the EDA.
Jiří Šedivý, the Chief Executive of the EDA, noted that while there is marked progress in defense investments propelled by the escalating threats faced by EU nations, a large proportion of spending remains directed towards off-the-shelf equipment sourced from outside the EU. This reality emphasizes the necessity for strengthening the European defense technological and industrial base to ensure greater self-sufficiency.
Eight EU nations successfully met the NATO benchmark of allocating at least 2% of their GDP towards defense spending in 2023, with Poland leading this category, closely followed by Estonia, Latvia, Greece, Lithuania, and Finland. Additionally, twenty member states achieved a benchmark where 20% of their defense expenditure was channeled into investments, with Luxembourg leading at 59%, and Estonia following with 46%, while both Finland and Poland allocated 45% of their defense budgets to investment.
Furthermore, EU spending on defense research and development (R&D) saw an increase to €11 billion in 2023, with forecasts projecting further growth to €13 billion this year. Although this reflects a significant rise, especially given that R&D spending has more than doubled since its low in 2016, the EU still lags behind major global players such as China and the United States, which reportedly spent €21 billion and approximately €129 billion respectively on defense R&D last year.
Šedivý expressed his appreciation for the rising allocations towards research, while also highlighting the reality that Europe remains behind both the U.S. and China in terms of investments in defense research and technology. The report indicates that two EU countries account for more than 80% of spending in this sector, and many member states continue to struggle to meet the benchmark to allocate 2% of their defense expenditures specifically towards research and technology initiatives.
