In a new report from the Swedish Defence Research Agency (FOI), commissioned by the Ministry of Defence, it is noted that Europe's defence industry remains fragmented and characterised by national preferences, despite increased military build-up and several cooperation initiatives.
In the report Defence Industrial Outlook 2025, FOI describes the development of the global defence industry with a particular focus on Europe. According to FOI, the United States still has the world's most sophisticated and comprehensive defence industry, while China is rapidly closing the capability gap. Russia's industry is reported to have expertise in certain areas but is declining due to sanctions and resource shortages.
– The United States has long been the largest, and even though the defence industry in China is growing rapidly, the US is likely to retain the top position. However, China has significantly reduced the capability gap with the US, says Anton Hammarstedt, analyst and report author, in a press release from the agency.
Despite several initiatives such as OCCAR (Organisation for Joint Armament Cooperation), EDA (European Defence Agency), PESCO (Permanent Structured Cooperation), and EDF (European Defence Fund), FOI points out that large-scale integration in Europe is still lacking. At the same time, European dependence on suppliers from countries like the United States, Turkey, and South Korea is increasing.
– So far, we have not seen that various European cooperation formats have led to any large-scale integration, says Calle Håkansson, one of the report authors.
The researchers note, however, a measurable increase in defence collaborations around common platforms. At the same time, the report warns that too much consolidation can lead to reduced competition and increased vulnerability.
– There can also be a lack of competition and increased vulnerability, says Anton Hammarstedt.