E.U stepping up defence procurement

Defence affairs - Def-Geopolitics

Europe’s increased spending on defence is no doubt welcome in Brussels, but almost certainly less welcome is the knowledge that European Union members are increasingly buying equipment from outside the EU. 

This illustrates the quandary facing European defence ministries – whether to support European companies and help local industrial development, though sometimes at the cost of longer delivery times, or to accelerate the fielding of equipment by purchasing off-the-shelf, including from non-EU suppliers.

The European Commission’s 2024 European Defence Industrial Strategy (EDIS) set a target for members to spend at least 50% of their procurement budgets within the EU by 2030 and 60% by 2035. IISS data shows that the overall value of selected procurement contracts signed by EU members increased by over 109% from the period 2018–22 to 2022 to mid-2025, growing from more than USD112 billion to over USD235bn. However, in the period after 2022, the total spent on equipment from EU members reduced from 62% to 44%, with purchases increasing from Brazil, South Korea, Israel, the United Kingdom and the United States. If contracts for services, training and ammunition were included, it is almost certain the percentage would surpass the EDIS target.

The growth in procurement illustrates several trends relating to both the type of systems being acquired and their origin.

As European countries look to increase the size and capability of their armed forces following decades of decline, much of their extra funding is directed towards equipment recapitalisation, with the land domain receiving the greatest attention. From 2022 to mid-2025, EU members signed land contracts worth over USD111bn, marking a 344% increase over the USD25bn seen in the period 2018–21. Key investment areas include armoured fighting vehicles, artillery and ground-based air defence, where values have risen by 230%, 571% and 506%, respectively. Much of the increase in spending is driven by Polish procurement – Warsaw inked contracts worth more than USD55.4bn since 2022.

Of the sums committed in the land domain since 2022 by EU countries, over 39% (amounting to over USD44bn) went to equipment from EU companies, down from 48% in the preceding four-year period due to the extraordinary growth in market share of non-European and non-US suppliers since 2022. From 2018–21, EU members awarded land domain contracts worth more than USD5bn to non-EU and non-US companies. During 2022 to mid-2025, the equivalent sum was over USD43bn, a 777% increase in value, of which Polish contracts comprise over USD31bn (72.6%).

Limited options and shorter delivery schedules are key factors driving the procurement of non-EU systems. For example, no EU countries currently produce modern multiple rocket launchers (MRLs), meaning that European militaries often choose between systems from Israel, South Korea and the US. Regarding howitzers, South Korean and Israeli systems are often delivered quickly, and in the case of Korea’s K9 Thunder, produced in far larger numbers than European competitors, giving greater economies of scale. In 2022, Poland signed a series of contracts with South Korean industry, citing quality, technology transfer and speed of delivery as key factors in its decision. Similar considerations have played a part in other sales on the continent.

The total value of aerospace contracts signed by EU countries has also grown, from over USD53bn to more than USD94bn, a 77% increase. US firms dominate the market, receiving 46.6% and 59.8% of the value of contracts signed in 2018–21 and 2022 to mid-2025, respectively. There are numerous factors behind this growth, including the high cost of entry for some platforms in the sector, greater economies of scale on US production runs due to larger orders, political signalling through major aerospace deals, and a desire for interoperability with what is many countries’ most important defence partner. For countries with little experience of managing complex and expensive programmes, the US Foreign Military Sales system, whilst slow, can be attractive. As well as this, the F-35 is the sole low-observable, multi-role combat aircraft on the market. IISS data indicates that contracts for the F-35 comprise 14% of the total value of those signed by EU members from 2022 to mid-2025.