According to data quoted by Reuters, The defense budgets of European Union countries in 2024 reached EUR 343 billion, which is approximately 1.9%. GDP. Forecasts for 2025 indicate a further increase to EUR 381 billion, or 2.1%. GDP.
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Investments in defense are even more impressive, reaching a record EUR 106 billion in 2024 and expected to reach almost EUR 130 billion in the following year.
Many European countries strive to achieve the NATO goal of allocating at least 2%. GDP for defense. Moreover, the North Atlantic Alliance has set itself an ambitious goal of increasing this threshold to 5%. GDP by 2035, of which 3.5 percent is to be allocated to basic defense expenditure, and 1.5 percent. on broadly understood security issues.
Germany, as part of a special fund worth EUR 100 billion, accelerated the public procurement process, which allowed it to circumvent constitutional restrictions on debt.
Poland, which already spends 4.1% on defense. GDP, plans to increase this indicator to 4.7%. in 2025 In turn, France, Italy and the Nordic countries focus on the development of air defense, cyberspace, ammunition and naval capabilities.
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Increased military spending translated into the dynamic development of the European defense sector. The aviation and defense index on the Old Continent (SXPARO) increased by approximately 55%. over the last year, as shown by LSEG data.
European arms tycoons are collecting orders
The largest players in the defense sector in Europe include renowned companies such as Airbus, BAE Systems, Rheinmetall and the Italian Leonardo, specializing in the production of helicopters and military electronics. German company Hensoldt, which deals with radar and electronic warfare systems, has noticed an increase in demand for air surveillance technologies that fill gaps in European defense systems.
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Swedish Saab, maker of Gripen fighters and submarines, and French companies Safran and Thales, which provide advanced radar and cybernetic systems, are also gaining importance. Among the rising stars is the German manufacturer of tank gears, Renk Group, whose IPO is scheduled for 2024.
A new era for European defense
The war in Ukraine has revised Europe's approach to security. Increased military spending, development of defense technologies and growing investor interest indicate that the defense sector in Europe is entering a new era of dynamic growth and innovation.
