Europe for the largest increase in military spending since the Cold War. According to a McKinsey study carried out by the , European NATO countries will go beyond current levels to about 800,000 million euros annually in defense by 2030, that is, 300,000 million more than today.
The impulse responds to that of allocate at least 3.5% of GDP to basic defense spending and an additional 1.5% to comprehensive security before 2035.
But the report doesn’t just focus on the volume of money. The warning is clear: Europe faces a structural problem that can make this effort inefficient.
14 tanks against one: European fragmentation
The most striking data is that of heavy tanks. In the European NATO countries there are 14 different modelswhile the United States essentially operates one.
The difference is not limited to the tanks:
- 22 artillery systems heavy in Europe compared to 2 in the US.
- 15 tactical fighter aircraft models in Europe compared to 8 in the US.
On the whole, 171 weapons systems in Europe compared to 40 in the United States.
Michael Schöllhorn, head of defense at Airbus, summarizes it as a problem of structural fragmentation. Europe, on average, has five times as many different large systems as the United States. This diversity complicates interoperability, makes maintenance more expensive and dilutes economies of scale.
Furthermore, a relevant part of the European budget ends up in purchases from US industry, which reinforces – according to the report – the “virtuous circle” of defense in the US.
A “trillion euro challenge”
The study speaks of a “trillion-euro challenge” to recover operational readiness, modernize capabilities and replenish arsenals before 2030. This figure corresponds to the accumulated equipment acquisition needs of NATO (excluding Türkiye).
The main problem is not just how much to spend, but how to spend better and faster.
According to McKinsey, more than half of the major European defense programs:
- They exceed the expected deadlines by between 20% and 50%.
- They take between two and four years just to formalize contracts.
- They end up costing 20% to 40% more than initially budgeted.
Even when they arrive on time, many systems are already technologically outdated.
Three big challenges: speed, cost and relevance
The report identifies three central challenges:
- Speed: Procurement cycles are too long for an unstable geopolitical environment.
- Cost: cost overruns are recurrent and structural.
- Relevance– When the system goes into service, it may no longer respond to current threats.
Modern warfare, analysts argue, requires modular, scalable, volume-produced systems, not exclusively highly customized and complex platforms.
McKinsey proposes industry-specific consolidation, especially among suppliers, that could lead to Estimated savings of up to 9,000 million euros annually.
The stock market anticipates the boom
The increase in budgets is already reflected in the markets. According to the study, the defense sector stock index has risen 401% since 2022, far outperforming other sectors.
Europe must not only spend more. You must reorganize your industry and its procurement system if it wants to prevent the historical increase in investment from leading to an inefficient patchwork of incompatible systems. The challenge is not only budgetary. It is structural.
