In the wake of Russia's war of aggression against Ukraine, MS have demonstrated their commitment to fulfilling the investment objectives outlined in the Strategic Compass, aligning closely with the recommendations of the CARD Report and the binding commitments of the Permanent Structured Cooperation (PESCO). In 2022, total defence expenditure of the 27 Member States amounted to €240 billion, continuing the positive trend of eight consecutive years of growth - the inclusion of Denmark confirms that trend. The 2022 CARD Report estimated defence expenditure to further grow by up to €70 billion by 2025 and MS are on track to match their pledges before that time horizon. The figures for 2022 will not yet reflect the full response of MS to Russia's war of aggression with most of the unprecedented share of increases being reflected from 2023 onwards3. A record €58 billion, or 24.2% of MS total defence expenditure, was allocated to defence investments. For the fourth consecutive year, this increase demonstrates the commitment of MS to meet and surpass the agreed collective benchmark of dedicating 20% of their defence spending to strengthening EU defence. The current security context has further enhanced the overall trend of prioritising off-the-shelf procurement of equipment in most MS, despite the general increase in research and development (R&D) activities. In 2022, MS allocated €3.5 billion to defence R&T across the EU, a reduction of € 200 million compared to the previous year and significantly below the 2% benchmark. Coupled with uncoordinated defence investment, these trends pose a challenge to the coherence of the European Defence Landscape, increasing the risk of fragmentation. MS should make full use of all EU Defence Initiatives and seize the opportunity provided by the approval of the 2023 EU Capability Development Priorities and the ongoing bilateral dialogues from the 2023-2024 CARD cycle framework to better coordinate defence investment plans across the Union, spend their resources more efficiently, reduce fragmentation, thus strengthening EU defence.
