EU defence spending reaches record high in 2023, set to grow further in 2024

By Defence Indutry Europe

The European Defence Agency (EDA) has published its annual Defence Data report for 2023, revealing that EU Member States collectively spent a record €279 billion on defence. This marks a 10% increase from 2022, continuing a nine-year trend of rising defence budgets, with 22 countries increasing expenditure and 11 surpassing a 10% growth rate.

 

For 2024, the EDA’s Coordinated Annual Review on Defence (CARD) projects defence spending to hit an unprecedented €326 billion. Defence investments are expected to represent 31% of this total, while research and technology (R&T) funding is forecasted to grow to €5 billion. Procurement spending could surpass €90 billion, reflecting sustained growth in equipping Member States’ militaries.

 

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2023: a year of significant defence growth

The return of large-scale conflict to Europe has prompted EU countries to enhance their military capabilities. Defence investments reached a record €72 billion in 2023, accounting for 26% of overall expenditure—the highest share since data collection began in 2005. Investment in new equipment rose by 19%, underscoring a shift towards modernisation.

Collaborative R&T projects, partly funded by the European Defence Fund (EDF), saw notable progress. Approximately €100 million was allocated to projects initiated under EDF calls in 2021 and 2022, marking the fund’s growing influence on the European defence landscape.

EDA Chief Executive Jiří Šedivý highlighted the importance of collaboration and innovation: “The European Union is making strides in defence investments, spurred by the urgency of the threats we face. Still, a large proportion is spent on off-the-shelf equipment from outside the EU, highlighting the need to fortify the European Defence Technological and Industrial Base. Buying together saves money, while developing assets together makes us more independent.”

 

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Investment and innovation challenges

Member States allocated €72 billion to defence investments in 2023, exceeding the 20% benchmark of total expenditure for the fifth consecutive year. Luxembourg led with 59% of its defence budget allocated to investment, followed by Estonia (49%), Finland (45%), and Poland (45%).

However, R&T spending remains below the agreed benchmark of 2% of total defence budgets. Two Member States accounted for more than 80% of R&T spending, demonstrating significant disparities. Collaborative efforts like EDA initiatives and EDF funding are vital to bridging this gap and enhancing EU-wide innovation.

While welcoming increased R&T spending, Šedivý warned of Europe’s lag behind global powers: “Europe lags behind the United States and China in defence research and technology investment. To secure Europe’s future, we must prioritise innovation and unity.”

 

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