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Title page

Contents

Executive summary 1

1. Introduction 2

2. The cost of no EU single market 4

3. Conceptualising European defence industrial policy 7

4. The European defence sector 10

5. A European approach to increase military equipment output at reasonable costs 14

6. Conclusions 16

References 18

Table 1. Estimated costs for third-generation main battle tanks in four countries 5

Table 2. Estimated costs for 155mm self-propelled howitzers, selected countries 6

Table 3. Global top 10 and European top 10 defence companies by turnover, 2022 11

Figure 1. Defence spending in the EU (left scale) and spending on military equipment (right scale), % of GDP 3

Figure 2. NATO members' defence and equipment spending, 2014 vs 2024, % of national GDP and of total defence expenditure, grouped by NATO commitments met 3

Figure 3. Military spending, 2023, $ billions, nominal and military purchasing power parity adjusted 5

Figure 4. Self-propelled howitzer cost per unit and production annual capacity 6

Figure 5. Conceptualising defence/military industrial policy 7

Figure 6. Timeline of EU defence initiatives 8

Figure 7. Stock price evolution of major global and European defence companies 12

Figure 8. Public R&D spending on defence, % of total public R&D expenditure, major developed economies 14

Boxes

Box 1. An overview on EU defence initiatives and structures 9

Box 2. Examples of defence joint ventures 12

Box 3. Industrial policy and long-term needs, European defence to foster innovation 13