Defence financing in the EU: Needs, ambitions and progress
The Council's agreement last week on the AGILE mandate – opening trilogue on a €115 million programme designed to get disruptive defence innovations from lab to deployment in weeks rather than years - puts a sharp spotlight on the questions: is Europe actually financing its defence the right way?
This paper for GLOBSEC’s competitiveness tracker takes stock and argues that the honest answer is: not yet.
The EU-27 collectively outspend both Russia and China on defence. Yet fragmented procurement, duplicated programmes, and nationally siloed forces mean Europe gets far less capability per euro than those numbers suggest. Multiple allied assessments point to roughly €250 billion per year in additional outlays this decade to achieve credible deterrence by 2030 – and Europe's actual needs may run closer to €1.25 trillion. The tools now in place – SAFE loans, the fiscal escape clause, EDIP – are real steps, but they cover only a fraction of what is needed.
The paper argues for concrete solutions along five dimensions of financing:
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ramping up spending;
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pooling and focusing investment;
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standardising and simplifying rules;
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Europeanising sourcing to reduce dependence on non-EU suppliers (78% of weapons procurement came from outside the EU in 2022–23);
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crowding in more private capital
The financing architecture is taking shape, but delivery remains patchy and political will to treat defence as a European public good – requiring pooled sovereignty and aligned fiscal priorities – is not yet there.
The paper was originally published by GLOBSEC.
Philipp Lausberg is a Senior Policy Analyst in the European Political Economy Programme at the European Policy Centre and leads the EPC’s EU sanctions project.
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