European Budgets Ups and Downs

Slow, Slow, Quick, Quick…. Slow….

If 2019 marked a positive trend in overall EU defence spending, the same could not be said of EU cooperation, particularly in the research and technology (R&T) field. Indeed, as shown in a new report prepared by the European Defence Agency (EDA), EU cooperation in R&T amounted to only €141 million – €320 million less than in 2008, when EU joint R&T was had reached its zenith. 

This means, in other words, that the money spent represented “the lowest level of collaborative spending” ever measured by EDA, according to the report. Another EU cooperation area – that of joint equipment procurement – scored better, with €7 billion being reached in 2019, though this still represented a 6% decrease from 2017. 

On the other hand, however, overall defence expenditure  amongthe 26 EDA members’ grew “for the fifth consecutive year,” reaching an aggregate of €186 billion. This was the strongest increase since 2015. Compared with 2018 figures, the data shows that 23 countries raised defence expenditures. In four of them – France, Germany, the Netherlands and Bulgaria –  the increase was more than a €1 billion. Italy, however, was one of three countries which decreased their spending in 2019. 

Of the aggregated total of €186 billion, the report shows that €41 billion was dedicated to defence investments, of which 83.1% was used to procure new equipment and 16.9% devoted to defence R&D. 

Looking at the ‘big picture,’ it is clear that the increase in overall budget that has taken place since 2015 represents the first sign of recovery from the severe effects of the 2008 economic crisis. In 2016, game-changing events, such as Donald Trump‘s election as US president and the Brexit referendum in Britain, triggered a comprehensive EU re-thinking of its strategic role and gave further impetus to change. However, as noted in the CARD 2020 review, the rise in defence budgets was mainly aimed at serving national interests. Countries spent their money on purchasing non-European systems – such as the F-35 – or the development of new systems and weapons at the national level, with the parallel goal of supporting industry and boosting exports. 

Any effects from the EDF and PESCO have yet to materialise, as the instruments are still too recent. In the next few years, however, bearing in mind the emergence of the pandemic in 2020, expectations of budget increases will most likely be disappointed, at least for a couple of years, until European economies are able recover.

Caterina Tani in Brussels for MON

Publish date

02/03/2021

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