European Defence Agency finds record European defence spending in 2020
On December 6, the European Defence Agency (EDA) published its annual Defence Data report for 2019-2020, detailing defence spending by the 26 EDA Member States. In 2020, total defence spending stood at €198 billion, marking a further 5% increase on 2019, and making it the highest level ever recorded by EDA since it began collecting data in 2006. EDA’s report also finds that 19 Member States increased their overall defence spending in 2020, with 6 raising spending by over 10%.
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On December 6, 2021, the European Defence Agency (EDA) published its annual Defence Data report for 2019-2020 (Picture source: EDA)
Sustained Rise in Defence Expenditure and Investment
At €198 billion, total defence expenditure corresponds to 1.5 % of the 26 EDA Member States’ gross domestic product (GDP) and marks the sixth year of consecutive growth. For the second year in a row, EDA has recorded a 5% rise in defence spending, despite the economic impacts of COVID-19.
EDA’s Defence Data report finds that the sustained increase in overall spending is also reflected in national numbers. In 2020, of the 19 Member States who increased spending, 13 raised spending by 5% or more. 6 Member States raised it by 10% or more. 7 Member States reduced spending, up from 3 in 2019, for a combined total reduction of €1.42 billion.
Increased spending was also recorded in a variety of areas, with defence investments in research, development and procurement of new equipment continuing to grow. Defence investments by the Member States hit EDA’s high-ever recorded figure of €44 billion, representing a 5% increase on 2019.
When combined, Member States have achieved the 20% benchmark of defence investment as a percentage of total defence expenditure, with 14 Member States allocating 20% or more, while a joint EDA recorded a low of only 3 states spent less than 10% in this area.
New low in collaborative European defence spending
Despite the sustained rise in total defence expenditure, collaborative defence spending has continued to trend downward. In 2020, Member States spent a total of €4.1 billion on the procurement of new equipment in cooperation with others, a fall of 13% compared to 2019. The data submitted to EDA shows a significant reduction in European collaborative defence equipment procurement since 2016. Member States conducted just 11% of their total equipment procurement in cooperation with other EU Member States in 2020, falling well short of the 35% collective benchmark, which is also a commitment under Permanent Structured Cooperation (PESCO).
European Defence Spending - 2020 Key Findings
EDA’s report, based on data voluntarily provided by Ministries of Defence, also finds that total defence expenditure represented 2.8% of total government expenditure. Additional findings include:
Of the €44 billion spent on defence investments, 83% or €36 billion were used for equipment procurement and 17% or €8 billion for research and development. The same percentage split as in 2019.
The procurement of new equipment has benefited most from increased spending with a record €36 billion allocated in 2020, compared to the recent low of €21 billion in 2014.
A record €2.5 billion was allocated to defence research and technology in 2020. The increase is driven by two Member States – France and Germany – who together provide more than 90% of the increase in R&T.
EDA Chief Executive, Jiří Šedivý said: “The sustained rise in European defence spending is a positive development and 2020’s figures show that the errors of deep defence cuts following the 2007-2008 financial crisis are unlikely to be repeated. I particularly welcome the record €2.5 billion allocated to defence research and technology as a positive sign for the long-term, but equally hope to see more Member States invest in this key domain for European competitiveness and autonomy.
Through EDA’s work on European defence cooperation, I remain convinced that spending better means spending together. Based on the data we received, the downward trend in European collaborative spending is particularly concerning. There are reasons to be optimistic that this trend will be reversed in the years to come as PESCO projects mature, CARD focus areas are taken forward and the European Defence Fund is launched. It is now time for the Member States to firmly move European defence collaboration from process to projects.”
Uneven Investment in Defence Research & Technology
In 2020, defence Research and Technology (R&T) spending amounted to €2.5 billion, marking a massive 46% increase compared to 2019 and an EDA recorded high. This brings defence R&T expenditure as a percentage of total defence expenditure above 1% for the first time since 2014.
The trend of running defence projects predominantly nationally rather than collectively also applies to defence R&T. In 2020, Member States spent €143 million on defence R&T projects in cooperation with other EU states, representing 6% of Member States total defence R&T expenditure. This marks the lowest share recorded by EDA since it started collecting data in 2005 and is far below the benchmark of 20%. Uneven R&T investment is also evident here as 6 Member States – Croatia, Estonia, Italy, Poland, Portugal and Spain – do achieve the 20% benchmark, of which 3 spend more than 50% of their defence R&T expenditure with others.
Background
EDA collects defence data on an annual basis and has done so since 2006, in line with the Agency’s Ministerial Steering Board Decision of November 2005. The Ministries of Defence of the Agency’s 26 Member States provide the data. EDA acts as the custodian of the data and publishes the aggregated figures in its booklets.
All data is collated (“total incorporates 26 EDA Member States”), and it has been rounded. Defence expenditure figures are provided in constant 2020 prices, to take inflation into account and allow for a comparison across years.
