European defense industry shows impressive growth amid war in Ukraine
21 November 2024 12:51
The war in Ukraine has led to a significant increase in defense spending in Europe, which has led to an increase in revenues for the European defense industry. This was reported by the Association of Aerospace, Security and Defense Industries of Europe (ASD), reports "Komersant Ukrainian" with reference to DefenseNews.
Representatives of European defense companies report improved financial results since Russia’s invasion of Ukraine in February 2022, as governments are actively strengthening their military capabilities.
Thus, the revenues of EU defense companies in 2023 increased by 16.9%, with total industry revenues reaching almost 160 billion euros. The number of employees in the sector increased by 8.9%, reaching 581 thousand people.
Exports and growth of individual sectors
Exports of defense products outside the EU increased by 12.6% in 2023, reaching 57.4 billion euros. The ASD noted that these supplies are critical to maintaining the competitiveness of the European defense industry, given the relatively modest size of Europe’s domestic market and the high costs of developing new technologies.
According to the association, Europe’s aerospace defense sector grew by 15.8%, reaching revenues of €64.8 billion. Revenue in the maritime sector grew by 17.7% to €37.9 billion, while the land sector showed similar growth, reaching €56.2 billion. The total revenue of all three sectors amounted to 158.8 billion euros.
In 2023, 17,700 new jobs were created in the aerospace industry, bringing the total number of employees to 217,000. The land and maritime sectors employ 364 thousand people.
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Industry challenges
Despite the growth, ASD emphasized that the European defense industry faces a number of challenges.
“Decades of underfunding and off-the-shelf purchases from suppliers outside Europe have led to a significant reduction in production capacity on the continent. This strategic mistake became apparent after Russia’s full-scale invasion of Ukraine,”
– the statement reads.
One of the key challenges is dependence on imports of critical minerals and semiconductors. To overcome these challenges, ASD proposes to increase investment, optimize supply chains, and develop strategies to reduce dependence on external sources.
Comparison of defense budgets
According to the association, after the annexation of Crimea by Russia in 2014, the defense budget of EU member states increased by only 20%. This is significantly lower than the growth of the defense budgets of Russia and China, which increased their spending by 300% and 600% respectively during this period.
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