The defence sector now occupies a central position in the European agenda. The war in Ukraine has acted as a wake-up call, highlighting Europe’s structural vulnerabilities, in particular its dependence on imported equipment, critical technologies and strategic industrial capabilities.
In the face of a persistently unstable geopolitical environment and the need for greater strategic autonomy, the European Union is seeking to reduce its vulnerabilities by strengthening its defence industrial and technological base, limiting external dependencies and enhancing cooperation between Member States. This dynamic concerns both conventional capabilities and increasingly critical domains such as space and related strategic infrastructures. The protection of space assets against cyber threats, electromagnetic interference, collision risks and hostile actions is now a strategic priority in its own right.
What specific challenges does Europe face in the defence sector?
Two Dassault Rafale fighter jets over the city of Zagreb, Croatia
- External technological and material dependence: despite its ambitions, Europe remains highly dependent on imports for several critical capabilities, including missile systems, combat aircraft and certain cybersecurity components. According to a Commission staff working document, 78% of the EUR 75 billion spent by Member States between June 2022 and June 2023 was spent outside the EU, nearly 80% of which went to the United States. This dependence also concerns critical raw materials essential for defence applications: the EU is almost 100% dependent on imports for 19 out of 39 raw materials identified in this field, and 73% of its gallium imports came from China in 2023 (Maulny, ARES Group, 09/2023; EUR-Lex, 2024).
- Industrial fragmentation: European defence remains characterised by a high degree of fragmentation in both demand and equipment. Collaborative procurement accounted for only 18% of acquisitions in 2021, far below the collective target of 35%. A recent European Parliament study also highlights that up to 17 types of main battle tanks coexist within the EU, compared to a single model in the United States. This fragmentation hampers interoperability and increases costs (EDIS Issue Paper 2, 2023; EDIS Issue Paper 3, 2023; EPRS, 2024).
- Limited production capacity: the war in Ukraine has highlighted insufficient European production capacity, particularly in ammunition. In January 2024, the EU acknowledged that it would deliver only around 52% of the one million shells promised to Ukraine by the March deadline. Key bottlenecks included propellant powders, explosives, certain inputs such as nitrocellulose, as well as testing and certification capacities (Reuters, 2024; European Commission, 2024).
- Transition statement: these vulnerabilities call for coordinated public policy responses at European level, combining support for innovation, securing supply chains, scaling up industrial capacity and incentivising cooperation between Member States. This is the rationale behind the main European instruments presented below (European Commission, 2025).
What are the main European initiatives supporting the defence sector?
The European Union has progressively structured a funding framework for defence, which had long remained the exclusive responsibility of Member States:
- European Defence Fund (EDF): with a budget of nearly EUR 7.3 billion for 2021–2027, it supports collaborative research and development in areas such as artificial intelligence, autonomous systems and drones, space technologies, secure communications, and advanced components such as chiplets for defence applications (European Commission, 2021; European Commission, 2025).
- EDIRPA (European Defence Industry Reinforcement through Common Procurement Act, 2022): an adopted instrument with a budget of EUR 300 million until the end of 2025, aimed at encouraging joint procurement between Member States, particularly in ammunition, air and missile defence, platforms and the replacement of legacy systems (EUR-Lex, 2023; European Commission, 2025).
- EDIP (European Defence Industry Programme, 2024): adopted at the end of 2025, it mobilises EUR 1.5 billion over 2025–2027 and goes beyond ammunition alone. It aims more broadly at strengthening defence industrial readiness, including support for capacity ramp-up, supply chains, critical components and raw materials, as well as the industrialisation of jointly developed products (European Parliament, 2025; EUR-Lex, 2025; European Council, 2026).
- EU Space Strategy for Security and Defence: presented in 2023, it structures the protection of European space assets, strengthens space surveillance and supports the development of secure services. It is part of a broader framework including the EU Space Programme, with a budget of EUR 14.88 billion for 2021–2027, and IRIS², for which the EU contribution amounts to EUR 2.4 billion over 2023–2027. The EU Space Act, launched on 25 June 2025, remains at this stage a proposal (European Commission, 2023; EUR-Lex, 2023; European Commission, 2025).
How does european economics position itself in response to defence-related challenges?
With its expertise in structuring and financing strategic projects, european economics supports its clients at every stage of their initiatives in the defence sector:
- Identification of relevant public funding: at both European and national level, to support the development of critical capabilities, breakthrough technologies and strategic industrial projects,
- Project structuring and preparation: ensuring alignment with European priorities in terms of sovereignty, innovation, cooperation and industrial resilience,
- Development of collaborative projects: facilitating partnerships between industry, research centres and public stakeholders, in compliance with European programme requirements,
- Support with administrative and regulatory procedures: with European institutions and competent national authorities,
- Support for capacity-building and securing value chains: strengthening the European defence industrial and technological base, including in critical areas such as components, strategic materials and dual-use infrastructure.
Our team supports project developers in securing public funding and maximising the economic, industrial and strategic impact of their initiatives in the defence sector.
