After the 2022 outbreak of the Ukraine war, European countries have sharply increased their defense budgets. In 2025, NATO‑member European states spent roughly $559 billion on defense, with Germany alone contributing a record $114 billion.
Experts say the continent’s defense industry still faces structural problems. Fragmented suppliers and competition among European nations lead to duplicated projects and lower productivity. Political and industrial disagreements have stalled major joint initiatives, such as France and Germany’s sixth‑generation fighter program. The complex, slow procurement process delays delivery of new equipment, and large contracts are dominated by major firms, leaving little room for innovative startups.
The rising defense costs also strain European economies, raising concerns about the sustainability of this spending trend. Analysts argue that the core issue is not a lack of money but a lack of coordination among governments and bureaucratic structures that prevent large budgets from translating into real military capability.