Patria FAMOUS

EDA’s 2024 Report: EU Defence Spending Surges, But Is It Enough?

By
Share with your friends

Questions remain about the effectiveness and sufficiency of efforts to address Europe’s security challenges, as the European Defence Agency (EDA) celebrates its 20th anniversary. However, there has been a significant expansion in defence spending and collaborative initiatives within the European alliance. Projects like CAVS and FAMOUS, counteract the fragmentation of the European defence industry.

In 2024, EU defence expenditures reached an estimated €326 billion, representing 1.9 percent of the bloc’s GDP—a 30 percent increase since 2021. Notably, 31 percent of this spending was allocated to defence investments, primarily for new equipment procurement. Europe’s fragmented defence sector remains highly dependent on the United States.

In its 2024 annual report, the EDA reported engagement in over 100 Research and Technology (R&T) projects valued at €681 million, alongside more than 40 capability projects and 28 EU-funded initiatives under the European Defence Fund (EDF). Local production, investments, and long-term demand are needed for a growth boost in Europe. Otherwise, the boost is likely to remain limited, economists predict.

In 2022, the European Commission put forward a regulation to boost the EU’s defence industry through joint purchasing – the European Defence Industry Reinforcement through Common Procurement Act (EDIRPA). It was signed off by the European Parliament and Council in 2023. The Commission then adopted the EDIRPA Work Programme in March 2024 and launched calls for proposals in three key areas:

  • Ammunition – including small arms, artillery shells, mortars and rockets
  • Air and missile defence
  • Platforms and replacement of outdated systems

Strengthened Mandate and Strategic Initiatives

European Collaborative Defence R&T by Funding Source. (Image: EDA Annual Report 2024)

The 2024 Long-Term Review granted the EDA an expanded mandate, encompassing five core tasks: identifying shared capability needs, promoting collaborative research and innovation, harmonising military requirements, facilitating joint procurement, and representing defence interests at the EU level.

Key initiatives include joint procurement of 155mm artillery ammunition and collaborative efforts in areas such as integrated air and missile defence, electronic warfare, loitering munitions, and the development of a European combat vessel.

Why Aggregating Defence Demand Matters

  • Unified Planning: Coordinating member states’ defence requirements reduces market fragmentation and duplication of efforts.
  • Cost Efficiency: Joint procurement leverages bulk purchasing, leading to significant cost savings and preventing internal competition for resources.
  • Accelerated Delivery: Standardised requirements streamline production and distribution processes, ensuring faster deployment of defence capabilities.
  • Enhanced Industrial Capacity: A consolidated demand provides the European defence industry with predictable, long-term contracts, facilitating the scaling up of manufacturing capacities and strengthening the overall security of supply across the EU.
  • Improved Interoperability: Collaborative procurement fosters the development of compatible systems and platforms, enhancing the ability of EU armed forces to operate together effectively.

The war in Ukraine has drained national ammunition stockpiles. EU countries agreed to jointly buy 155mm artillery ammunition to restock and support Ukraine.

How the Joint Ammunition Purchase Works

  • Market Survey
    EDA identifies potential suppliers of full ammunition rounds and components (e.g. fuses, projectiles, primers, chargers).
  • Tendering
    EDA invites selected companies to bid competitively. Suppliers are assessed on cost, delivery speed, and production capacity. Suppliers are organised into a cascade, in a priority list.
  • Negotiations
    Direct negotiations take place with all suppliers who submitted bids.
  • Framework Agreements
    EDA signs contracts with all chosen suppliers in the cascade, finalising commercial terms and delivery timelines.
  • Order Placement
    Member states’ demand is combined into unified orders, which are placed with each supplier in the agreed cascade.
  • Funding Commitments
    Member States send the necessary funds to EDA to fulfil their part of the deal.
  • Contract Execution
    The agreed contracts come into force and execution begins.
  • Production Starts
    Manufacturers begin producing the ordered ammunition.
  • Delivery
    Ammunition is shipped to the Member States.

Governments can choose to either replenish their national ammunition stocks or ordnate the delivered ammunition to Ukraine.

Small Changes in R&D Funding

In 2023, the European Commission approved an investment of approximately €1.2 billion in collaborative defence research and development, supporting 61 industrial R&D projects aimed at enhancing defence capabilities.
Last year, in 2024, the EDF launched calls for proposals totalling €1.1 billion, marking a slight decrease from the previous year. This funding aimed to support a wide range of defence projects, including the development of unmanned vehicles and secure space communications.

The European Commission adopted the fifth annual Work Programme under the EDF in 2025, allocating €1.065 billion to collaborative defence research and development projects. This investment focuses on strengthening Europe’s defence capabilities, promoting technological innovation, and enhancing industrial competitiveness across the EU.

The EDF’s total budget for the 2021–2027 period stands at €7.3 billion, comprising €2.7 billion for collaborative defence research and €5.3 billion for capability development projects.

Fragmentation Persists – Majority of New Orders go to U.S.

Despite increased EU-level investment, concerns persist regarding the fragmentation of Europe’s defence industry and reliance on non-EU suppliers. For instance, between February 2022 and mid-2023, acquisitions from outside Europe accounted for 75 percent of new defence orders publicly announced in the EU, with over 60 percent going to U.S. firms.

The EDF’s budget for 2021–2027 stands at €7.3 billion, comprising €2.7 billion for collaborative defence research and €5.3 billion for capability development projects. Projections indicate that EDF funding for collaborative defence R&D will exceed €1 billion by 2026. Analysts argue that without a cohesive industrial strategy and increased domestic production, Europe’s defence initiatives may fall short of achieving strategic autonomy. The European Defence Industrial Strategy (EDIS), introduced in March 2024, aims to address these issues by promoting joint procurement and reducing dependency on external suppliers.

Counteracting Fragmentation: CAVS and FAMOUS

Patria, a Finnish defence company, leads two major European collaborative initiatives—CAVS and FAMOUS—that aim to counteract the fragmentation of Europe’s defence industry by promoting joint development, procurement, and industrial cooperation.

  • Common Armoured Vehicle System (CAVS): Initiated in 2019 by Finland and Latvia, the CAVS programme focuses on the joint development of the Patria 6×6 armoured vehicle. The programme has expanded to include Sweden, Germany, and Denmark, with deliveries already underway to several participating nations. CAVS enhances interoperability among European armed forces, reduces costs through shared procurement, and strengthens local defence industries by involving national companies in production and maintenance. For instance, Germany plans to replace its ageing Fuchs armoured vehicle fleet with the Patria 6×6, with local manufacturing partnerships established to facilitate this transition.
  • Future Highly Mobile Augmented Armoured Systems (FAMOUS): Coordinated by Patria and led by Finland, the FAMOUS programme aims to develop next-generation tracked armoured vehicles suitable for diverse operational environments, including Arctic conditions. The initiative involves a consortium of 35 companies from nine EU member states, fostering technological innovation and standardization across the European defence sector. In March 2025, Patria unveiled a prototype of the FAMOUS All-Terrain Vehicle (ATV), demonstrating the programme’s progress towards enhancing Europe’s ground combat capabilities.

Both CAVS and FAMOUS are examples of effective European collaboration in defence, aiming to reduce industrial fragmentation, dependency on non-EU suppliers, and strengthen the continent’s strategic autonomy. More such projects are urgently needed.

Read More:

Must Read