Industrial Attrition: Europe’s Defence Procurement Paradox 

Europe’s defence spending is reaching record levels, with €392 billion projected in 2025–26, yet 75% of procurement flows outside the Union. Recent PESCO assessments and procurement data reveal structural industrial weaknesses and persistent delays in collaborative projects. These trends create a “valley of death” in capability development and heighten Europe’s strategic dependence on external suppliers.

On 9 February 2026, the European Parliamentary Research Service (EPRS) released its latest assessment of Permanent Structured Cooperation (PESCO), the EU framework for joint defence capability development, warning that most projects launched since 2017 remain in the “design” or “execution” phase despite being more than five years old (EPRS, 2026). The report arrives at a moment of unprecedented financial mobilisation with expenditure surging to €343 billion in 2024—a 43% increase from 2021 (European Defence Agency, 2025) EU defence spending is projected to reach a record €392 billion in 2025–26 (Council of the European Union, 2025).

Yet behind this surge lies a crisis. Approximately 75% of recent defence procurement spending has flowed to suppliers outside the European Union (European Commission, 2024; Maulny, 2023). Europe is spending more than ever, but much of that capital is reinforcing industrial capacity abroad rather than at home.

The Spending Surge and the Externalisation Problem

Russia’s invasion of Ukraine triggered an extraordinary fiscal response. Equipment procurement rose from €52 billion in 2021 to €88 billion in 2024, with projections exceeding €100 billion annually thereafter (European Defence Agency, 2025). Overall defence expenditure has increased by roughly 63% since 2020 (Council of the European Union, 2025).

However, between February 2022 and mid-2023, 78% of defence acquisitions by EU member states originated from non-EU suppliers, with 63% sourced from the United States alone (Maulny, 2023; European Commission, 2024). Even after some moderation in 2024, nearly half of procurement remained external (IISS, 2024).

In practical terms, nearly €8 out of every €10 spent on urgent capability gaps during the peak procurement surge reinforced non-European supply chains. Emergency purchases of F-35 aircraft, Patriot air defence systems, HIMARS launchers and 155mm ammunition delivered immediate operational gains  but diverted capital away from the European Defence Technological and Industrial Base (EDTIB).

The data shows a structural contradiction: Europe’s fiscal mobilisation is historically significant, yet its industrial reinforcement is geographically misaligned.

Three Factors Behind the Paradox

Three factors drive this procurement externalisation. First, urgency: after February 2022, member states prioritised speed of delivery over industrial policy. US manufacturers possessed ready production lines and stockpiles, whereas many European producers did not (IISS, 2024). Second, fragmentation: the EDTIB generated €183.4 billion in turnover and employed 633,000 people in 2024 (Council of the European Union, 2025), yet production remains nationally segmented. Without consolidated demand, European firms struggle to scale output rapidly. Third, implementation gaps within collaborative mechanisms persist. Since 2017, 83 PESCO projects have been launched across land, maritime, air, cyber, and space domains (PESCO, 2025). The 9 February 2026 EPRS report indicates that most projects remain in the design or execution phase, with only a small fraction achieving full operational delivery (EPRS, 2026).

This creates a “valley of death”: projects move from concept to prototype but fail to transition into serial production due to insufficient guaranteed procurement volumes (International Centre for Defence and Security, 2025). Without predictable long-term orders, firms cannot invest in expanded production capacity.

Strategic Implications

External procurement has cumulative strategic effects. Dependence on US platforms ties European operational readiness to American supply chains and International Traffic in Arms Regulations (ITAR), limiting autonomy in scenarios where transatlantic priorities diverge (Jacques Delors Centre, 2024). Industrial weakness also affects deterrence credibility: the EU pledged to deliver 1 million 155mm artillery shells to Ukraine but initially fell short of that target (Jacques Delors Centre, 2024).

Research and development asymmetry further widens the gap. US defence R&D spending stands at €140 billion annually, compared with roughly €13 billion in Europe in 2024 (European Defence Agency, 2025). Even with higher aggregate spending, the innovation differential remains significant. Each procurement cycle favouring external suppliers reduces future domestic resilience.

Policy Response: EDIS and EDIP

In March 2024, the European Commission introduced the European Defence Industrial Strategy (EDIS), accompanied by the European Defence Industry Programme (EDIP) (European Commission, 2024). EDIS sets targets of 50% of procurement from the EDTIB by 2030 and 60% by 2035, with 40% of acquisitions conducted collaboratively.

EDIP allocates €1.5 billion for 2025–27 (Council of the European Union, 2025). However, projected capability requirements over the next decade are estimated at €400–500 billion (Brexit Institute, 2024). The gap between ambition and funding is substantial. Without structural incentives including multi-year joint procurement commitments and guaranteed production volumes externalisation trends may persist.

Conclusion

Europe’s defence posture has strengthened quantitatively. Spending has reached record levels, and capabilities are expanding. Yet industrial capacity lags behind fiscal effort. If 75% of incremental procurement continues to leave the continent, Europe risks deepening external dependence precisely when it seeks greater strategic autonomy. Financial mobilisation alone does not produce industrial resilience.

Europe is not facing a spending crisis, it is facing an allocation crisis. Unless procurement incentives shift from urgency to sustainability, today’s record budgets may entrench tomorrow’s strategic vulnerability. The February 2026 EPRS findings underscore the challenge: collaborative frameworks exist, but delivery remains slow. The coming five years will determine whether Europe converts fiscal expansion into industrial reinforcement or whether the current procurement surge becomes another missed opportunity in European defence integration.

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