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Written by Sebastian Clapp and Martin Höflmayr with Falk Vambrie.
The European defence industry is highly fragmented, with limited collaborative investment and procurement, divergent national regulations, and protectionist tendencies that undermine efficiency, interoperability and competitiveness. The Letta report makes the case for a concerted effort to advance towards the development of a ‘Common Market for the Security and Defence Industry’, which focuses on regulatory simplification, pooled procurement, and cross-border industrial integration. While the Draghi report puts its finger on the EU defence sector’s fragmentation, under-investment, and external dependencies, it urges coordinated action to strengthen the industrial base, boost joint innovation, and align national efforts through common policies and incentives. According to the White Paper for European Defence, a truly integrated EU defence market would be among the largest globally, strengthening competitiveness, readiness and industrial scale. It would enable firms from the European defence technological and industrial base (EDTIB) to expand across the Union and stimulate cross-border cooperation, mergers and new ventures, increasing the availability of EU-made defence products.
The new Defence Readiness Omnibus aims to remove procedural bottlenecks and facilitate up to €800 billion in defence investment under the Rearm Europe/Readiness 2030 plan, combining streamlined procurement rules, simplified intra-EU transfers, and revised financial instruments. Achieving readiness and autonomy requires predictable joint planning, harmonised standards, and public-private coordination. Without genuine market reform, Europe’s rising defence spending risks being absorbed by inefficiencies rather than delivering real capability gains. A functioning common defence market is therefore essential not only for competitiveness, but also for deterrence, resilience and strategic sovereignty in an increasingly volatile geopolitical environment.
The European Parliament advocates a fully integrated internal market for defence to overcome fragmentation, urging regulatory reform, joint procurement, and cross-border industrial cooperation as essential steps towards greater efficiency, competitiveness, and strategic autonomy.
Read the complete briefing on ‘Building a common market for European defence‘ in the Think Tank pages of the European Parliament.
EU members of NATO: Composition of defence spending