Despite billions in spending, Europe’s military build-up risks falling short

These are the findings of a joint report by Bruegel and the Kiel Institute for the World Economy (IfW Kiel), based on data from the Kiel Military Procurement Tracker. This resource systematically monitors Russian military production alongside military orders from Germany, the UK, Poland, and—to a more limited extent—France, for the period 2020 to 2025. The report includes extensive military-related data, including figures on production levels, workforce numbers, and imports.

Read the full report: "Fit for war by 2030? European rearmament efforts vis-a-vis Russia"

According to the report, European production of artillery shells and howitzers has risen markedly, now nearly meeting the requirements for a credible, autonomous deterrent against Russia. While millions of artillery shells are being produced, more than 400 howitzers are now manufactured annually by various European firms—a significant increase from 168 in 2022. However, output of tanks, infantry fighting vehicles, missiles, and combat aircraft remains well below the necessary levels. The researchers estimate that production of tanks and infantry vehicles would need to increase up to sixfold to match the pace of Russia’s rearmament. Similarly, Europe’s missile manufacturing capacity must urgently expand to bolster its deterrence capabilities.

A greater emphasis on innovation

The report also highlights that Europe remains heavily reliant on the United States for advanced weapons technology, with domestic production of high-end systems still limited. European weapons systems are, on average, significantly more expensive than their international counterparts.

“Despite the sharp increase in defense spending, Europe’s rearmament efforts may falter unless defense market integration across the continent progresses,” said Guntram Wolff, Professor at the Solvay Brussels School and author of the study. “Placing joint orders for selected weapons systems with the most cost-effective suppliers within Europe would bring down prices.” Large collective orders not only reduce unit costs through economies of scale but also stimulate competition by opening up national markets, leading to further savings.

In addition to joint procurement, the authors argue that a stronger focus on innovation is essential for meeting Europe’s defense objectives. “Armaments planning must now shift more towards new technologies that have proven effective in Ukraine,” said Wolff. Simply expanding the production of drones or unmanned vehicles will not suffice. Europe also needs to develop its own cloud computing infrastructure and AI capabilities.

Meanwhile, Europe’s defense research and development funding must see a substantial increase. At present, European countries invest around EUR13 billion annually—a small fraction of the USD145 billion spent by the United States. “This leaves Europe lagging behind the US, China, and Russia in areas such as drones, missile systems, and digital warfare,” Wolff warned.

The creation of a European innovation agency, modelled on America’s DARPA, could help bridge this gap. The aim would be to ensure defense start-ups enjoy equal access to contracts as established players, helping bring cutting-edge military systems into operation more rapidly.