PARIS — European Union countries increased defense spending by 10% to a record €279 billion ($293 billion) last year, with the share of budgets spent on new equipment rising to the highest since the start of data collection almost two decades ago, the European Defence Agency reported.
The EU’s 27 member states together spent €72 billion on defense investments, or 26% of their total expenditure, the EDA said in a report published Wednesday. Most of that money went into development and procurement, with spending on new weapons, systems and equipment rising 19% from a year earlier to around €61 billion.
EU defense expenditure is projected to rise again in 2024, reaching €326 billion, with defense investments accounting for a record 31% share of total spending. Procurement spending could increase to more than €90 billion this year, according to the agency.
Member states are bolstering military capabilities in response to Russia’s war of aggression against Ukraine, EDA said. EU countries Increased weapon purchases to replenish stocks depleted by providing military aid to Ukraine, address capability gaps and increase preparedness for high-intensity conflict.
“The return of full-scale war to Europe and efforts by member states to strengthen their military capabilities led to a noticeable jump in defense spending in 2023,” the EU agency said.
Total EU defense spending rose for a ninth year and is up by almost €100 billion from 2014, when the budget for defense hit a low, after several years of cuts in the wake of the 2008 financial crisis.
The urge to swiftly address capacity shortfalls through buying of commercial off-the-shelf equipment may have caused a temporary slowdown last year of common European procurement, which is seen as complex and time-consuming, according to the EDA.
“The European Union is making strides in defense investments, spurred by the urgency of the threats we face,” EDA Chief Executive Jiří Šedivý in a statement. “Still, a large proportion is spent on off-the-shelf equipment from outside the EU, highlighting the need to fortify the European defense technological and industrial base.”
Eight EU countries met the NATO benchmark of spending at least 2% of GDP on defense in 2023, according to the report. Poland was the top spender by share of its economy, followed by Estonia, Latvia, Greece, Lithuania and Finland.
Twenty member states reached a benchmark of 20% of defense expenditure going to investment, led by Luxembourg with 59%, Estonia with 46%, as well as Finland and Poland, which both dedicating 45% of their spending on investment.
EU spending on defense R&D rose to €11 billion in 2023 and is forecast to reach €13 billion this year. While R&D spending has more than doubled from a low in 2016, the EU is behind China, which may have spent the equivalent of €21 billion on defense R&D last year, as well as the U.S., which spent around €129 billion on R&D, testing and evaluation, according to the report.
“I welcome rising research spending,” Šedivý said. “But Europe lags behind the United States and China in defense research and technology investment.”
Two EU countries account for more than 80% of defense research and technology spending, with many member states still failing to reach a benchmark to spend 2% of their defense expenditure on research and technology. The EDA report didn’t identify the two top spenders.
Rudy Ruitenberg is a Europe correspondent for Defense News. He started his career at Bloomberg News and has experience reporting on technology, commodity markets and politics.
