Blog Post

The size and location of Europe’s defence industry

There is growing debate about a common European military policy and defence spending. Such moves would have major economic implications. We look at the supply side and summarise some key facts about the European defence sector: its size, structure, and ability to meet a possibly increased demand from EU member states.

By: Date: June 22, 2017 Topic: European Macroeconomics & Governance

With a turnover of over €100 billion in 2015, the European defence industry does not rank among the largest manufacturing sectors in the EU. Nevertheless, the industry employs around 500 000 people directly and indirectly generates 1 200 000 jobs (in 2014). This gives the industry an additional importance beyond its inherent security aspect.

The structure of the European defence industry, similar to other manufacturing industries, is highly dispersed with a few large players and about 1350 small and medium-sized enterprises (SMEs). While companies are scattered over almost the whole EU, a few countries (Austria, Czech Republic, France, Germany, Italy, Poland, Spain, Sweden, and the United Kingdom) host the bulk of SMEs as well as top companies.

This “top group” consists of 31 companies covered by the SIPRI Arms Industry Database of the Stockholm International Peace Research Institute (SIPRI)

Even within the “top group” of European defence companies, yearly turnovers range between €0.5 billion and €23 billion EUR (average €3 billion). Employment ranges between 1900 and 154 000 employees (average 30 000 employees).

As shown in the map above, the UK, France, and Italy dominate the European market in terms of the number of active companies and their sales of arms. In the UK BAE Systems (€23 billion of arms sales and 82 500 employees) is the largest defence company. In France it is Thales (€7 billion and 62 000) and Safran (€4.5 billion and 70 000). In Italy Finmeccanica (€8 billion and 47 000) is the largest. In addition, Airbus, a trans-European company, ranks second (€13 billion and 136 000) in Europe after BAE Systems. Note that some of these companies are not exclusively producers of arms, which explains the varying ratios of sales to employees.

Looking at smaller companies is difficult because of a lack of information on Eurostat. However, the data which is available indicates that small companies are mainly active in the production of weapons and ammunition, while large companies focus more on vehicle production and aircrafts.

To sum up, the European defence sector is comprised of a few top players such as BAE Systems, Airbus, Finmeccanica, and Thales, along with hundreds of SMEs. A more harmonised and streamlined European defence policy might bring efficiency gains due to a further specialisation of countries, regions or companies in certain technologies.

The data presented here also show that the European defence industry is not evenly spread across the EU. This suggests that increased military spending by EU member states may not flow equally to all member states. For example, Germany may be one of the countries that will increase defence spending most strongly. But Germany’s domestic defence industry is comparatively small, and therefore might not be the destination of increased funding. If increased spending in one country flows to firms in other countries, this could result in new trade flows.


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.

Read about event More on this topic
 

Past Event

Past Event

From playing field to player: Europe’s strategic autonomy as our generation’s goal

At this online event Charles Michel spoke about the importance of Europe's strategic autonomy.

Speakers: Charles Michel and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: September 28, 2020
Read article More on this topic More by this author
 

Opinion

Europe’s recovery gamble

Next Generation EU, was rightly hailed as a major breakthrough: never before had the EU borrowed to finance expenditures, let alone transfers to member states. But the programme and its Recovery and Resilience Facility amount to a high-risk gamble.

By: Jean Pisani-Ferry Topic: Finance & Financial Regulation Date: September 25, 2020
Read about event
 

Past Event

Past Event

The Sound of Economics Live: The State of the Union going forward

In the first Sound of Economics Live episode after summer we look at the State of the Union address delivered by Ursula von der Leyen.

Speakers: Giuseppe Porcaro, André Sapir, Guntram B. Wolff and Alicia García-Herrero Topic: Energy & Climate, European Macroeconomics & Governance, Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: September 16, 2020
Read article More on this topic More by this author
 

Opinion

Without good governance, the EU borrowing mechanism to boost the recovery could fail

The European Union recovery fund could greatly increase the stability of the bloc and its monetary union. But the fund needs clearer objectives, sustainable growth criteria and close monitoring so that spending achieves its goals and is free of corruption. In finalising the fund, the EU should take the time to design a strong governance mechanism.

By: Guntram B. Wolff Topic: European Macroeconomics & Governance Date: September 15, 2020
Read about event More on this topic
 

Past Event

Past Event

Redefining Europe's role after the COVID-19 pandemic

Amidst COVID-19: how to keep markets integrated when states play a bigger role in the EU and its neighbourhood?

Speakers: Gabriele Bischoff, John Erik Fossum, Kalypso Nicolaïdis and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 25, 2020
Read article
 

Blog Post

One last push is needed to improve the Just Transition Fund proposal

The European Parliament and the Council still have an opportunity to improve the Just Transition Fund by refocusing it on social support and basing fund allocations on more granular information that takes into account not only countries’ needs but also their green ambitions.

By: Aliénor Cameron, Grégory Claeys, Catarina Midões and Simone Tagliapietra Topic: Energy & Climate, European Macroeconomics & Governance Date: June 11, 2020
Read about event More on this topic
 

Past Event

Past Event

The Sound of Economics Live: Rebooting Europe - a framework for post COVID-19 economic recovery

Mapping out the post COVID-19 recovery.

Speakers: Maria Demertzis, Giuseppe Porcaro, Simone Tagliapietra and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 15, 2020
Read about event More on this topic
 

Past Event

Past Event

Democracy in the times of COVID-19 with Věra Jourová

How can Europe uphold its democratic values while fighting COVID-19?

Speakers: Sam Fleming, Věra Jourová and Michael Leigh Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 14, 2020
Read article Download PDF
 

Policy Brief

Rebooting Europe: a framework for a post COVID-19 economic recovery

COVID-19 has triggered a severe recession and policymakers in European Union countries are providing generous, largely indiscriminate, support to companies. As the recession gets deeper, a more comprehensive strategy is needed. This should be based on four principles: viability of supported entities, fairness, achieving societal goals, and giving society a share in future profits. The effort should be structured around equity and recovery funds with borrowing at EU level.

By: Julia Anderson, Simone Tagliapietra and Guntram B. Wolff Topic: Energy & Climate, European Macroeconomics & Governance Date: May 13, 2020
Read article More on this topic
 

Blog Post

EU trade in medical goods: why self-sufficiency is the wrong approach

As countries are struggling with the COVID-19 pandemic, shortages in medical equipment led to EU export controls and war-time like procurement of respirators. While the crisis is still unfolding, there is a debate on whether the EU is too reliant on global value chains for medical goods. Looking at the world market of medical goods for the EU, we argue that self-sufficiency is the wrong approach. Global medical markets are to the benefits of the EU and stockpiling and preparation are more effective in preparing for emergencies.

By: Sybrand Brekelmans and Niclas Poitiers Topic: Global Economics & Governance Date: April 14, 2020
Read article More on this topic More by this author
 

Blog Post

What the EU should do and not do on trade in medical equipment

The European Union has introduced export controls on some medical supplies. This was a mistake. It should announce that it is withdrawing the measure, and call on other countries to do the same.

By: André Sapir Topic: European Macroeconomics & Governance Date: March 25, 2020
Read article Download PDF
 

External Publication

Analysis of developments in EU capital flows in the global context

This report presents an overview of the recent trends of capital flows, focused especially on the past year. It provides a detailed analysis at the global level and at the European Union level.

By: Grégory Claeys, Maria Demertzis, Marta Domínguez-Jiménez, Konstantinos Efstathiou and Tanja Linta Topic: European Macroeconomics & Governance Date: March 16, 2020
Load more posts