2023 witnessed a sharp increase in total defence expenditure, with a total amount of €279 billion being spent by European Union Member States (MS), which corresponds to 1.6% of MS Gross Domestic Product (GDP). The development and procurement of new weapons systems was the primary factor driving the increase in defence budgets, as MS have been making efforts to bolster their armed forces' fighting capabilities in response to Russia's war of aggression against Ukraine. As a result, defence investments reached a recordbreaking €72 billion, accounting for 26% of total defence expenditure, the largest share recorded by the European Defence Agency (EDA) since data collection began in 2005. As in previous years, more than 80% of defence investments, some €61 billion, were allocated to the procurement of equipment. MS frequently resorted to Commercial Off-The-Shelf (COTS) products ordered from non-European manufacturers to quickly fill capability gaps, weakening the European Defence Technological and Industrial Base (EDTIB). The urge to swiftly address capability shortfalls through COTS products may have caused a temporary slowdown of European collaborative defence procurement, which tends to be perceived as more complex and time-consuming. The exposure of MS significant military capability shortfalls has heightened awareness of the opportunities for European collaborative solutions, creating greater potential for increased European collaborative procurements in the coming years. Defence Research and Development (R&D) spending, which includes any payments up to the point where expenditure for production of items starts to be incurred, reached €11 billion in 2023, more than doubling the amount spent in 2016, when defence R&D was at a record low. Yet, other international players, such as the US and China, outclass EU MS when it comes to investments in defence R&D, highlighting the increasing importance of this activity given the potential for conflicts with technologically sophisticated adversaries.
