More money, more dependence?

Policy Brief

Europe is entering an era of unprecedented defence investment, with EU institutions and member states projected to spend nearly €6.8 trillion on defence by 2035. This surge comes amid a deteriorating security environment shaped by Russia’s war on Ukraine, growing transatlantic uncertainty and intensifying dependencies on non-EU defence suppliers – particularly the United States. 

Against this backdrop, the EU has developed an expanding suite of financial instruments, including the European Defence Fund (EDF), the European Defence Industrial Programme (EDIP) and the Security Action for Europe loan facility (SAFE), to strengthen the European Defence Technological and Industrial Base (EDTIB) and incentivise cross-border defence cooperation. 

This FEPS policy brief by Daniel Fiott (VUB) therefore assesses whether these mechanisms effectively support the EU’s strategic autonomy ambitions and evaluates how Europe’s financial architecture can better channel rising defence expenditure into cooperative, long-term capability development. The analysis finds that the EU has made significant progress, yet challenges remain. Despite the scale of new investments, the risk of renewed renationalisation persists as member states increasingly procure off-the-shelf non-EU systems and utilise fiscal exemptions to support national industries. Moreover, governance fragmentation at the EU level threatens to limit the effectiveness of emerging joint procurement tools. The success of the new EDIP, particularly with flagship European Defence Projects of Common Interest, will depend on substantial post-2027 funding and much tighter links between EU financing and binding commitments to joint capability development. 

The brief concludes that to avoid financial integration becoming a vehicle for managed national competition, the EU must strengthen conditionality on cooperative procurement, prioritise EDPCIs within a significantly enlarged EDIP, improve oversight of SGP defence exemptions and develop a more coherent governance model that aligns the Union’s diverse financing instruments with its long-term strategic autonomy goals.

This policy brief was launched at Call to Europe Denmark, alongside the publications ReArm Europe and Smarter spending today, safer societies tomorrow.

This policy brief was developed in the framework of FEPS EU Defence Working Group.