The European Commission plans to increase German defense spending and planned infrastructure investments are key factors, along with lower central bank interest rates, which could offset some of the impact of U.
S. import duties on the eurozone economy and manufacturing, according to ING International Bank.
"The total volume of defense production in the EU may grow as much as five times by 2030," the report says on May 1.
A boost to the eurozone's industrial output is expected from the commission's initiative to unlock Eur650 billion ($737 billion) — if countries allocate an additional 1.5% of GDP to defense — raising the EU average defense budget to 3.5% of GDP.
In addition to the planned EUR150 billion in European defense loans, the EU is also considering shifting the existing Eur392 billion into the European Cohesion Policy, a fund to strengthen the defense capabilities of member states, ING said.
The bank stressed that EU defense spending is already on the rise, having increased by more than 30% over the past four years, to 1.8% of GDP, as well as domestic production of military transport such as fighter planes, warships, submarines and tanks, has been one of the EU's few growing industrial sectors in recent years. time is second only to medicines, but otherwise, the advantages for local manufacturers are limited by Europe's lack of production capacity and non-unified forms of defense strategy.
As a result, since the Russian invasion of Ukraine, approximately 80% of EU state defense orders have gone to EU firms: Europe's imports of major weapons increased by 155% between 2015-2019 and 2020-2024, according to the ING report.
The EU has ensured it is rolling out agreed defense standards that overcome the currently fragmented nature of its military and equipment market, builds collective investments in production and better use of dual-use technologies and capacities in enterprises previously focused solely on the civilian market, in an area that can see its exit protection soar with potentially 50% of its military needs produced in the EU in the long run, ING estimates.
An increasing number of European manufacturers are already realizing their capabilities in military products. Dutch civilian manufacturer VDL wants to use its former car factory to produce defense equipment, while German tank manufacturer Rheinmetall is interested in some Volkswagen facilities. Franco-German military equipment manufacturer KNDS recently acquired a railcar manufacturing plant from French rolling stock manufacturer Alstom in order to
