How realistic is the proposed European defence industrial strategy?

Publishing date
18 March 2024
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newsletter 1403

The European defence industrial strategy (EDIS), proposed on 5 March, aims to strengthen the European defence technological and industrial base (EDTIB), a sector that turned over €70 billion in 2021. The strategy has a lot to recommend it: it takes a positive tone towards the defence industry and rightly wants to reduce fragmentation and strengthen the single market for defence. But three aspects of EDIS might need correction.

First, the strategy is overly positive in its assessment of the EDTIB capacities. While European ammunition production has increased substantially in the last two years, it still falls short of needs In a context in which Russian production has increased and Russia has secured supply from its allies. EDIS appears to downplay the immediate challenge of producing enough weapons and ammunition for Ukraine and to refill European stocks.

Second, the strategy proposes a much higher domestic share of production to meet procurement needs, without explaining properly why this is desirable. Using global supplies to respond to the demand shock for defence products is important for Europe and for Russia. Aiming for greater domestic production is warranted but doing so at the expense of foreign supply would be a mistake in the short term as ammunition would be missing and transatlantic relations could deteriorate. In the medium to long terms, strategic industrial policy in the defence sector might well benefit from not only focussing on the EU but including partner countries, such as the United Kingdom.

And third, the strategy needs to be bolder on funding. Public funding at EU level is extremely limited and access to private funding for smaller firms in the defence sector is more constrained than elsewhere.

Find out more about strategies for bolstering European security and addressing geopolitical uncertainties by watching Bruegel's event 'Defence as Europe's trump card: strategies to safeguard EU against potential American retrenchment'.

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About the authors

  • Guntram B. Wolff

    Guntram Wolff is a Senior fellow at Bruegel. He is also a Professor of Public Policy and Economics at the Willy Brandt School of Public Policy. From 2022-2024, he was the Director and CEO of the German Council on Foreign Relations (DGAP) and from 2013-22 the director of Bruegel. Over his career, he has contributed to research on European political economy, climate policy, geoeconomics, macroeconomics and foreign affairs. His work was published in academic journals such as Nature, Science, Research Policy, Energy Policy, Climate Policy, Journal of European Public Policy, Journal of Banking and Finance. His co-authored book “The macroeconomics of decarbonization” is published in Cambridge University Press.

    An experienced public adviser, he has been testifying twice a year since 2013 to the informal European finance ministers’ and central bank governors’ ECOFIN Council meeting on a large variety of topics. He also regularly testifies to the European Parliament, the Bundestag and speaks to corporate boards. In 2020, Business Insider ranked him one of the 28 most influential “power players” in Europe. From 2012-16, he was a member of the French prime minister’s Conseil d’Analyse Economique. In 2018, then IMF managing director Christine Lagarde appointed him to the external advisory group on surveillance to review the Fund’s priorities. In 2021, he was appointed member and co-director to the G20 High level independent panel on pandemic prevention, preparedness and response under the co-chairs Tharman Shanmugaratnam, Lawrence H. Summers and Ngozi Okonjo-Iweala. From 2013-22, he was an advisor to the Mastercard Centre for Inclusive Growth. He is a member of the Bulgarian Council of Economic Analysis, the European Council on Foreign Affairs and  advisory board of Elcano.

    Guntram joined Bruegel from the European Commission, where he worked on the macroeconomics of the euro area and the reform of euro area governance. Prior to joining the Commission, he worked in the research department at the Bundesbank, which he joined after completing his PhD in economics at the University of Bonn. He also worked as an external adviser to the International Monetary Fund. He is fluent in German, English, and French. His work is regularly published and cited in leading media. 

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