Institute

3. Preserving European Defence Capabilities at a Time of Economic Crisis
and Defence Budget Cuts
National defence budgets need to contend now with public finances under pressure
from a growing pension burden; a shrinking recruitment pool; and societies increasingly
cautious about interventionist operations abroad, concerned with issues of legitimacy in the
use of force, and the public opinion more inclined to favour soft power strategies over hard
capabilities and ‘defence’ spending. 43
On the other hand, a widespread view among Member States is growing concerning
increased investment in defence industries that might provide the required economic boost to
help alleviate the economic crisis in Europe, with the EU defence sector worth €96 billion,
and providing 1.5 million jobs. 44
There are indeed economic arguments in favour of a joint European defence policy,
with studies estimating ‘the potential savings that can be achieved through European
cooperation at between €26 bn and €130 bn.’ 45 Emphasis is laid on gains emerging from
defence trade and competition in the EU, from a liberalized EU-level defence market, from
the creation of scale economies, and from reducing duplication of expensive R&Ds.
The EDA Member States’ aggregated defence data for 2013 of the 27 EDA
participating Member States 46 reflects Europe’s defence expenditure decrease. It stands to
prove that national defence budgets are an easy target for finance ministries to balance the
books, 2013 being no exception to the recent years’ trend across the EDA Member States to
cut defence spending.
Despite the fact that EDA increased from 26 to 27 Member States in 2013, the total
defence expenditure of its Member States decreased by EUR 1.7 billion or 0.9 %, compared
to 2012, to EUR 186 billion. By contrast, the EU-US Defence Data for 2011 shows that the
US spent €503 billion on defence in 2011 compared to €193 billion spent in the EU: around
2,5 times more. The EU data represents the spending of the 26 EDA participating Member
States. 47 In real terms, the total defence expenditure has been declining since 2006, dropping
by over EUR 32 billion or about 15% from 2006 to 2013. 48 Both as a share of GDP and as a
share of the total government spending, defence expenditure has decreased for the seventh
year in a row to its lowest values since 2006, 1.45% and 2.97% 49 , respectively.
R&D/R&T expenditure displays even more worrisome and vacillating trends, with
‘defence investment, comprising equipment procurement and R&D (including R&T)
expenditure, following a sharp decrease in 2011 (-10.5%), increased slightly in 2012, but
43 The EDA, Future Trends from the Capability Development Plan. Accessed September 25, 2015.
http://www.eda.europa.eu/docs/documents/brochure_cdp.pdf
44 The Institute of International and European Affairs. Accessed September 25, 2015. http://www.iiea.com/
45 Independent Review on European Security & Defence, The European Security and Defence Union 18/1
(2014): 41.
46 The EDA Defence Data 2013. Accessed September 25, 2015.
http://issuu.com/europeandefenceagency/docs/eda_defence_data_2013_web/1?e=4763412/12106343
47 The EU-US Defence Data 2011. Accessed September 25, 2015. http://www.eda.europa.eu/docs/defaultsource/news/eu-us-defence-data-2011.pdf
48 The EDA Defence Data 2013. Accessed September 25, 2015.
http://issuu.com/europeandefenceagency/docs/eda_defence_data_2013_web/1?e=4763412/12106343
49 Ibidem