The European defense sector is experiencing an unprecedented moment of self-examination and recalibration. Signals from the EU Council presidency and multiple national governments now converge on a single, inescapable fact: the continent must rebuild credible deterrence and industrial readiness within the next five years. This timeline, once seen as a distant hypothetical, has solidified into a shared benchmark as threats from the east persist and the global security architecture shifts.
Recent remarks by Denmark’s Prime Minister Mette Frederiksen, for example, illustrate the urgency. Acknowledging that Europe’s decades-long underinvestment in defense was a miscalculation, she argued forcefully that no region can afford to depend entirely on external guarantees. This sentiment, widely echoed by Baltic and Polish leaders, positions the next half-decade as a window for decisive action.
An Ambitious Framework: Readiness 2030
The European Commission’s flagship initiative, Readiness 2030, is the clearest institutional expression of this urgency. Announced earlier this year, the plan targets an injection of approximately €800 billion in fresh defense-related spending across member states. The approach combines national budget exemptions, joint procurement incentives, and strategic support from the European Investment Bank. It also leverages the Capital Markets Union to attract private capital into the defense-technology sector — a domain that, until recently, remained peripheral for many investors.
The intention is to shift Europe from a fragmented set of national procurement strategies to a more synchronized industrial ecosystem. By simplifying tendering processes, easing export controls inside the bloc, and pooling orders for high-demand platforms — such as air defense systems and reconnaissance drones — the Readiness 2030 agenda aspires to deliver scale and resilience at a pace that matches current geopolitical risks.
Bridging the Capability Gap
While the goals are ambitious, the capability gap remains stark. Recent analyses suggest that Russia, even under sanctions, retains significant production capacity for artillery shells, drones, and electronic warfare systems. Ukraine’s experience has also highlighted the critical importance of drone swarms and agile munitions supply chains. European states have yet to demonstrate that they can produce at equivalent scale or speed. Various reports indicate that the EU collectively lags behind in drone output and stockpiles of critical components.
Industry executives repeatedly emphasize that short-term political promises are insufficient on their own. The defense sector requires stable, multi-year orders and a predictable regulatory environment before committing capital to new plants, skilled labor, and advanced research. The issue is not just how much is spent but whether the funding flows in ways that create durable industrial capacity. This tension between headline commitments and real output is likely to define the sector’s internal debates over the next decade.
Fiscal Realism and Political Constraints
Another layer of complexity stems from the fiscal trade-offs inherent in such rearmament. Several member states have invoked special exemptions from EU deficit rules to accelerate defense investment, reflecting a notable policy shift. However, large-scale reallocation of public funds inevitably encounters political friction, especially when social spending or climate transition budgets are perceived as being at risk.
Some policymakers also remain skeptical that NATO’s ambition of 5% GDP defense spending by 2035 can be uniformly met. Not every national budget can expand so rapidly without triggering domestic resistance. These concerns fuel a wider debate about the sustainability of a defense-driven fiscal policy at a time when other priorities, from energy security to digital innovation, also compete for limited resources.
A Tactical Shift: Europe’s Drone Ambition
One practical response to this capability dilemma has been the emerging consensus on the role of drones. Lessons from the Ukraine conflict have pushed European planners to reconsider traditional procurement logic. Instead of focusing exclusively on expensive, complex platforms with long lead times, there is growing recognition that large volumes of low-cost, easily replaceable drones can deliver outsized strategic value.
The European Parliament and independent think tanks have called for annual production of drones in the millions by 2030. Yet, the continent still faces obstacles: dependence on non-European supply chains for critical components, fragmented certification regimes, and a relatively cautious investment environment. Scaling up will require not only capital but also the political will to harmonize standards and pool orders at the bloc level.
Industrial Collaboration and Strategic Autonomy
Underlying all these moves is the idea of strategic autonomy. In a world where U.S. priorities may not always align with European interests, building an industrial base that can meet urgent needs independently has become more than an aspirational slogan. It is now framed as a practical necessity.
This transition involves a delicate balance: deepening intra-EU cooperation, aligning member-state requirements, and fostering transatlantic ties where appropriate. It demands a long-term commitment to funding, research, and training — and a readiness to navigate domestic opposition when defense spending competes with other policy goals.
Looking Ahead: Signals of Change
In the coming months, the defense industry’s performance will be watched closely for signs that these ambitious announcements are materializing into real capabilities. Joint ventures like the Global Combat Air Programme (GCAP) and investments in missile defense illustrate where pooled resources can deliver complex systems more efficiently than parallel national projects. Meanwhile, the growth in venture capital for defense-tech startups indicates a subtle but meaningful cultural shift: more investors are willing to enter a historically sensitive market when political alignment appears durable.
For companies across the defense supply chain, the message is clear. Europe’s renewed focus on readiness, resilience, and technological edge opens opportunities — but also sets expectations. Firms must adapt to evolving procurement requirements, demonstrate transparency, and commit to cross-border partnerships that reflect the integrated approach that policymakers now demand.
As the Readiness 2030 timeline unfolds, the question will not be whether Europe can spend enough, but whether it can spend wisely, consistently, and in ways that create the sovereign capabilities the current security environment demands.
References
AP News (2025). The EU Presidency’s Call for Defense Readiness.
Business Insider (2025). Europe’s Drone Push and Production Gaps.
Reuters (2025). Europe’s Plans to Finance Defense Surge.
Bruegel Policy Brief (2025). Governance and Funding Challenges.
European Parliament Think Tank (2025). Readiness 2030 Plan.
