Defence`s Feeds

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Today, the European Defence Agency (EDA) published its annual Defence Data report for 2019-2020, detailing defence spending by the 26 EDA Member States. In 2020, total defence spending stood at €198 billion, marking a further 5% increase on 2019, and making it the highest level ever recorded by EDA since it began collecting data in 2006. EDA’s report also finds that 19 Member States increased their overall defence spending in 2020, with 6 raising spending by over 10%.

Sustained Rise in Defence Expenditure and Investment

At €198 billion, total defence expenditure corresponds to 1.5 % of the 26 EDA Member States’ gross domestic product (GDP) and marks the sixth year of consecutive growth. For the second year in a row EDA has recorded a 5% rise in defence spending, despite the economic impacts of COVID-19.

EDA’s Defence Data report finds that the sustained increase in overall spending is also reflected in national numbers. In 2020, of the 19 Member States who increased spending, 13 raised spending by 5% or more. 6 Member States raised it by 10% or more.  7 Member States reduced spending, up from 3 in 2019, for a combined total reduction of €1.42 billion.

Increased spending was also recorded in a variety of areas, with defence investments in research, development and procurement of new equipment continuing to grow. Defence investments by Member States hit EDA’s high-ever recorded figure of €44 billion, representing a 5% increase on 2019.

When combined, Member States have achieved the 20% benchmark of defence investment as a percentage of total defence expenditure, with 14 Member States allocating 20% or more, while a joint EDA recorded low of only 3 states spent less than 10% in this area.

New low in collaborative European defence spending

Despite the sustained rise in total defence expenditure, collaborative defence spending has continued to trend downward. In 2020, Member States spent a total of €4.1 billion on the procurement of new equipment in cooperation with others, a fall of 13% compared to 2019. The data submitted to EDA shows a significant reduction in European collaborative defence equipment procurement since 2016. Member States conducted just 11% of their total equipment procurement in cooperation with other EU Member States in 2020, falling well short of the 35% collective benchmark, which is also a commitment under Permanent Structured Cooperation (PESCO).

European Defence Spending - 2020 Key Findings

EDA’s report, based on data voluntarily provided by Ministries of Defence, also finds that total defence expenditure represented 2.8% of total government expenditure. Additional findings include:

• Of the €44 billion spent on defence investments, 83% or €36 billion were used for equipment procurement and 17% or €8 billion for research and development. The same percentage split as in 2019.
• Procurement of new equipment has benefited most from increased spending with a record €36 billion allocated in 2020, compared to the recent low of €21 billion in 2014.
• A record €2.5 billion was allocated to defence research and technology in 2020. The increase is driven by two Member States – France and Germany – who together provide more than 90% of the increase in R&T.

EDA Chief Executive, Jiří Šedivý said: “The sustained rise in European defence spending is a positive development and 2020’s figures show that the errors of deep defence cuts following the 2007-2008 financial crisis are unlikely to be repeated. I particularly welcome the record €2.5 billion allocated to defence research and technology as a positive sign for the long-term, but equally hope to see more Member States invest in this key domain for European competitiveness and autonomy.

Through EDA’s work on European defence cooperation, I remain convinced that spending better means spending together. Based on the data we received, the downward trend on European collaborative spending is particularly concerning. There are reasons to be optimistic that this trend will be reversed in the years to come as PESCO projects mature, CARD focus areas are taken forward and the European Defence Fund is launched. It is now time for Member States to firmly move European defence collaboration from process to projects.”

Uneven Investment in Defence Research & Technology

In 2020, defence Research and Technology (R&T) spending amounted to €2.5 billion, marking a massive 46% increase compared to 2019 and an EDA recorded high. This brings defence R&T expenditure as a percentage of total defence expenditure above 1% for the first time since 2014.

The trend of running defence projects predominantly nationally rather than collectively also applies to defence R&T. In 2020, Member States spent €143 million on defence R&T projects in cooperation with other EU states, representing 6% of Member States total defence R&T expenditure. This marks the lowest share recorded by EDA since it started collecting data in 2005 and is far below the benchmark of 20%. Uneven R&T investment is also evident here as 6 Member States – Croatia, Estonia, Italy, Poland, Portugal and Spain – do achieve the 20% benchmark, of which 3 spend more than 50% of their defence R&T expenditure with others.

Background

EDA collects defence data on an annual basis, and has done so since 2006, in line with the Agency’s Ministerial Steering Board Decision of November 2005. The Ministries of Defence of the Agency’s 26 Member States provide the data. EDA acts as the custodian of the data and publishes the aggregated figures in its booklets.

All data is collated (“total incorporates 26 EDA Member States”), and it has been rounded. Defence expenditure figures are provided in constant 2020 prices, to take inflation into account and allow for a comparison across years.

• EDA Defence Data Report 2019-2020

 

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EDA Chief Executive, Jiří Šedivý, visited Croatia this week (2-3 December) for high-level talks with Minister of Defence Mario Banožić, Chief of Defence Vice Admiral Robert Hranj, Defence State Secretary Zdravko Jakop, as well as the country’s national policy, capability, armaments and research directors. Mr Šedivý also met with Political Director Petar Mihatov (Ministry of Foreign Affairs) and representatives of Croatian Defence Industry Competitiveness Cluster.

Discussions with Minister Banožić focused on the potential and opportunities for Croatia to grow its engagement with EDA. Mr. Šedivý took the opportunity to further present EDA’s work and projects, with a special focus on the cooperation opportunities identified in the first Coordinated Annual Review on Defence (CARD) and the state of play in the PESCO implementation where Croatia is participating in seven projects.  Defence innovation, and EDA’s crucial role in it, were also raised with the minister, following up on the recent debate at EDA’s ministerial Steering Board. Several options for EDA’s future role are currently being discussed, including that of establishing a Defence Innovation Hub within the Agency. The ongoing work on the EU’s Strategic Compass was another agenda point. Mr Mr. Šedivý explained how the Agency contributes to the capability and technology dimensions (Invest chapter) of the Compass while insisting on the need for developing full spectrum, high-end capabilities by using the existing prioritisation and implementation tools such as the CARD, PESCO and the European Defence Fund (EDF).

“I am delighted to have had the opportunity to personally present EDA’s work and role to Croatia. This visit also allowed me to thank Croatia for its continuous support to the Agency and the different EU defence initiatives, including CARD and PESCO, which are crucial for bringing defence cooperation forward. I believe with the challenges that Europe is facing, cooperation remains the best and most effective way of addressing them. There is much potential in defence cooperation and the EDA for Croatia to exploit. I particularly welcome the opportunity to encourage the Croatian authorities to benefit further from collaborative opportunities in defence, especially using the Agency to their full potential”, Mr Šedivý commented.

Croatian Defence Minister Mario Banožić said: “The participation of Croatian companies in projects co-financed by the EDF opens up numerous opportunities. Certain amount of financial resources will need to be invested and this fact should also be considered when planning activities in the coming years. From the very beginning, Croatia has supported the establishment of the European Defence Fund and one of the priorities in the field of defence and security during the Croatian Presidency of the Council of the EU was to support strengthening the competitiveness of the defence industry. Therefore, Croatia supported the initial proposal of 13 billion euros for EDF and also regarding the cooperation - we supported the requirement of having minimum 3 entities from at least three Member States”.

Croatia is involved in several major EDA projects and programmes, such as Military Mobility (under which two technical arrangements for air and surface cross border movement permissions were signed by Croatia on 16 Nov.), the Chemical, Biological, Radiological Nuclear Surveillance as Service (CBRN SaaS) project where a Croatian company (Dok-Ing) is a member of the consortium implementing the project, or the Maritime Surveillance Network (MARSUR) which Croatia joined last year. Yet, the list of opportunities for additional involvement in EDA’s work is long.

The Chief Executive began his trip to Zagreb with a visit to the afore-mentioned Croatian defence company Dok-Ing where he stressed EDA’s industry engagement and the existing opportunities for industry to participate in and benefit from EDA’s activities, especially in the R&T domain.

 

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