Overview
- European defense budgets are rising fast as governments place large orders, yet much of the most advanced kit is being bought from the United States and Israel, including Germany’s Arrow 3 missiles and dozens of F‑35s.
- Analysts report record profits for Europe’s arms makers even as fragmented procurement and foreign purchases limit technological spillovers and threaten social spending without lifting long‑term growth.
- Spain exemplifies the spending wave with multibillion‑euro contracts for artillery, Patriot launchers, S‑80 submarines, heavy vehicles and the 8x8 Dragón program after a €10.47 billion boost announced in April.
- Transatlantic friction is intensifying, with U.S. tariffs, visa actions and sanctions targeting an EU ex‑commissioner over digital legislation, while Brussels continues to enforce its tech rules against American firms.
- Dependence on Chinese imports and a roughly €300 billion EU trade deficit coincide with Beijing’s 2025 export surge and ongoing support for Russia, as a packed 2026 election calendar led by Hungary’s April vote could reshape EU policy on Ukraine.