Europe’s defence gap: increased spending, limited power

This article is part of Friends of Europe’s Peace, Security and Defence programme and contributes to the Jacques Delors Friends of Europe Foundation’s Spending Better initiative, which aims to optimise defence spending, strengthen European institutions and defence capabilities, and enhance whole-of-Europe preparedness and societal resilience.

The procurement model funnelling billions into national industrial interests rather than collective capability will not fix itself – and Russia’s planners already know it.

Equipment stocks in European NATO countries are still below their 2021 levels. This is not a preliminary finding buried in a footnote: it is the headline conclusion of McKinsey’s February 2026 defence dashboard, drawn from official procurement data across the alliance. European NATO countries have spent more on defence in the past three years than at any comparable period since the Cold War. They have donated weapons to Ukraine, signed new procurement contracts and launched emergency production programmes. Their combined equipment inventory has shrunk regardless. The money is real. The output is not.

NATO’s European members and Canada collectively spent more than USD 482bn on defence in 2024. At The Hague Summit in June 2025, all 32 NATO members except Spain committed to a two-tier target: 3.5% of GDP on core military spending and a further 1.5% on security-related investment, potentially lifting the European total toward €800bn annually by the end of the decade. Mark Rutte, NATO’s Secretary General, declared it a transformational leap for collective defence.

The gap between that declaration and operational reality is the subject of this piece. The question is not whether Europe is spending enough – on current trajectories, it clearly is moving in the right direction. The question is whether the model through which that spending flows is capable of producing the military power the spending is supposed to buy. The evidence says no. And the reason is not mysterious, even if it goes largely unstated in official documents.

The mechanism nobody in Brussels will state plainly

European defence procurement is not fragmented by accident. It is fragmented by design – the accumulated design of governments whose defence industries are simultaneously strategic assets, employment programmes and instruments of domestic political patronage. France procures from French companies. Germany from German ones. Italy, Spain and Poland follow suit. According to research by Bruegel economists published in Intereconomics, Germany and France each procure more than 80% of their defence equipment from national sources. When the money flows, it flows home.

This is rational behaviour, which is precisely what makes it so difficult to dislodge. A defence minister who channels procurement funds to a domestic manufacturer secures jobs, maintains sovereign industrial capacity and retains leverage in coalition politics. One who supports joint European procurement through a supranational mechanism transfers that patronage to Brussels, gets less credit domestically, and introduces coordination costs and delays. The incentives point consistently toward national procurement and have done so for three decades. Acknowledging this in official documents would require European governments to indict their own behaviour. They do not.

The operational consequence is measurable. European NATO members currently operate 12 different main battle tank platforms, according to the same Bruegel research. The United States operates one. European platform fragmentation has increased by nearly 10% since 2014, according to McKinsey’s February 2026 analysis, driven primarily by land systems and missiles. This proliferation of incompatible platforms is not a feature of European defence architecture – it is the direct output of a procurement system optimised for domestic industrial distribution rather than collective military effectiveness.

Article 346 of the Treaty on the Functioning of the European Union (TFEU) allows member states to derogate from EU procurement rules for security reasons. Most of them use it, routinely, as a legal mechanism for protecting domestic industrial interests at the expense of joint procurement requirements. No Commission official will describe it in those terms. The data makes the description unavoidable.

The picture outside EU procurement frameworks is more complicated, and not uniformly worse. Norway, outside the EU but inside NATO and the European Economic Area (EEA), committed to spending 5% of GDP on defence at The Hague Summit and has raised its defence budget from €5.7bn in 2021 to €16bn in 2026 – a targeted, long-term plan focused on Arctic capability, electronic warfare and alliance interoperability. Norway shows what serious sovereign commitment to collective security looks like when the political economy is aligned with the strategic requirement. The contrast with EU procurement architecture is not flattering to the latter.

The United Kingdom is a more uncomfortable case. Britain presents itself as Europe’s leading military power. NATO has just revised its estimate of UK defence spending in 2025 downward to 2.31% of GDP – below the Alliance average of 2.77%. With up to 25% of that budget committed to maintaining a nuclear deterrent, the funding available for conventional capability is substantially lower than the headline figure implies. The Strategic Defence Review published in 2025 accepted all 62 of its advisers’ recommendations; the Defence Investment Plan that was supposed to fund them has not yet been published. Britain is spending real money on the presentation of military power. The gap between the rhetoric and the order of battle is, at this point, visible to allies.

What the gap actually costs

Rutte has warned publicly and repeatedly that Russia will likely pose a direct military threat to Alliance territory by 2029. That is three years from now. The assessment is not rhetorical – it reflects intelligence reporting serious enough for a NATO Secretary General to state in public, which means the classified version is at minimum equally stark.

The war in Ukraine has produced an operational data set that European defence planners cannot claim not to have read. Artillery consumption during peak periods ran into the thousands of rounds per day. Drone systems became persistent across the battlespace within months of their introduction. Logistics networks were continuously contested and partially destroyed. Ukraine’s survival has depended on industrial output, attrition tolerance and logistics depth – precisely the three areas in which European defence structures are most deficient.

Russia’s domestic artillery production for 2024 is estimated by Western intelligence and RUSI at between 2 and 2.3 million rounds, with total supply including North Korean transfers substantially higher. European combined output – after significant emergency investment and multiple production programmes – is projected at around 2 million rounds for 2025. Even NATO’s 2026 output target of 267,000 rounds per month would achieve only rough parity with Russian monthly production. Parity is not a deterrence margin. Deterrence requires the capacity to impose costs sufficient to make aggression irrational, which means sustaining high-intensity operations under attrition conditions without depending on US logistical depth and intelligence architecture that cannot, under any plausible political scenario over the next decade, be assumed permanently available.

Europe cannot currently meet that standard. Russia’s military planners have read the same data. The 2029 clock is running.

Why increased spending does not automatically produce increased capability

The standard defence of current policy is that capability takes time to build. Procurement cycles are long, industrial expansion requires multi-year commitments and the spending increases since 2022 will translate into visible capability improvements from 2026 and 2027 onwards. McKinsey’s February 2026 analysis supports part of this: deliveries from recent orders are expected to accelerate across those years and equipment is becoming more modern even as total stocks remain depressed.

Time supports capability development only when the procurement model is structurally sound – when money flows toward integrated, scalable, jointly conceived military output. When money flows through separate national systems optimised for domestic gain, capability growth is limited. The Czech-led ammunition initiative of 2024 – the most successful rapid-procurement effort European allies managed – sourced 1.6 million rounds entirely from third countries, because European domestic production could not deliver at scale or speed. The EU’s own financial support for Ukraine spent approximately 80% of its funds on non-European products for the same reason. More money into the current model produces more of the same: nationally distributed spending, limited aggregation and capability that cannot operate as a single system under pressure.

The EU’s ReArm Europe plan aims to leverage €800bn through to 2029, with €150bn in EU-backed loans through the Security Action for Europe (SAFE) instrument. Norway has qualified to participate in SAFE despite not being an EU member – a practical acknowledgement that the European security problem extends well beyond EU borders. These are serious instruments from serious institutions. They are also structurally subject to the same political economy that has produced thirty years of acknowledged fragmentation: the instruments are voluntary, participation remains discretionary, and the reforms require political will from governments that have demonstrated, consistently, that domestic industrial interests prevail when the choice is concrete rather than declaratory.

What structural change requires

The argument for integrated procurement has appeared in every major European security document since the 2003 European Security Strategy. The United States consolidated its defence sector from 51 major players to five over two decades. Europe has not, because consolidation would require shrinking national industries or merging into pan-European structures – a political cost no government has been willing to accept explicitly, which is why scale economies remain theoretical while production bottlenecks remain operational.

Structural change requires three things current policy is not delivering:

• Joint procurement mechanisms need real financial consequences for non-participation, not incentive schemes that member states can decline at zero cost. The EDIRPA and EDIP instruments are steps in the right direction but their combined budgets – €300mn and €1.5bn over multi-year periods – are negligible against national defence budgets and declining them costs nothing. Until opting out of collective procurement carries a measurable penalty, procurement nationalism will continue to be the rational choice for every defence minister in every national capital.
• Defence industrial policy must be restructured around output requirements rather than national distribution. The current approach tries to scale production while preserving national industrial footprints across dozens of separate markets. These objectives are structurally incompatible. Accepting that they are incompatible, and choosing output over distribution, is the decision that would actually change the architecture. Nobody in power has made it.
• The EU/non-EU divide in European defence must be treated as a structural problem rather than a coordination nuance. The UK, Norway and Türkiye are not peripheral to European security – they are central to it. The UK’s nuclear deterrent underpins NATO’s strategic posture. Norway’s Arctic forces cover the Alliance’s northern flank. Türkiye’s military is NATO’s second largest. Any European defence model that treats these allies as associated participants in an EU-centric procurement project rather than co-architects of a continent-wide security architecture will simply replicate the fragmentation it claims to be solving, at a larger scale.

Why spending isn’t enough

Europe’s rearmament is real, and spending is broadly in the right direction. But spending more is not the same as building a defence.

The structural problem is political and it has a specific mechanism: governments rationally optimise for domestic industrial and political interests, EU institutions lack the authority to override them, the major non-EU European allies operate in parallel frameworks with partial coordination at best, and every reform instrument introduced to date has been designed to avoid confronting any of that directly.

The result is a continent spending more than at any point since the Cold War while remaining unable to independently sustain a high-intensity conventional conflict on its eastern flank for an operationally meaningful period. Russia’s military planners are not reading Europe’s defence white papers for encouragement – they are reading them for gaps. The gaps are visible, documented in European sources and growing more expensive to close with each year of structural delay.

By 2029 – Rutte’s horizon for a credible Russian threat – the current model will have produced four more years of fragmented, scale-inefficient, operationally incoherent spending spread across institutional frameworks that were not designed to produce integrated military power and have not done so.

Spending more is not the same as building a defence. Europe is doing the former while postponing the latter – and calling it rearmament.

The views expressed in this #CriticalThinking article reflect those of the author(s) and not of Friends of Europe.