Europe’s defence sector recorded one of its strongest years on record, with industry leaders urging EU member states to favour European-made military equipment as the bloc ramps up rearmament in response to Russia’s ongoing aggression.

According to the annual report released by the Aerospace, Security and Defence Industries Association of Europe (ASD), turnover across its 4,000 member companies rose 10.1 percent in 2024 to €325.7 billion. Defence activities drove the surge, expanding by 13.8 percent to reach €183.4 billion. Civil aviation grew at a slower pace of 6 percent.

The boom in production has been matched by record hiring. Direct employment in the sector increased by 6.9 percent to 1,103,000 workers — the highest figure ever recorded. Defence-related jobs accounted for the bulk of the gains, rising 8.6 percent year-on-year to 633,000.

ASD President and Saab CEO Micael Johansson said the sector’s momentum reflects Europe’s broader geopolitical concerns. “Our sectors are not only vital to Europe’s economy. They are essential for Europe’s security, connectivity and resilience, ultimately for its sovereignty at a time of fast-shifting global dynamics,” he said. He stressed that the EU’s next multiannual budget must prioritise industrial investment to maintain competitiveness and strategic strength.

Defence Spending Surges Across EU

EU member states have sharply boosted their defence budgets since Russia’s full-scale invasion of Ukraine in 2022. Combined defence spending across the bloc reached €343 billion last year, up from €251 billion in 2021. Intelligence assessments have warned that Russia could threaten additional European countries before the decade ends, prompting governments to speed up procurement and expand production capacity.

In response, the European Commission has launched measures to accelerate defence manufacturing, including easing fiscal limits on defence spending and reducing regulatory barriers for companies. The proposal for the EU’s next seven-year budget allocates €131 billion for defence, a significant jump from the roughly €10 billion assigned in the 2021–2027 cycle.

Yet divisions remain among member states over whether to prioritise domestically produced European systems — which often face longer delivery timelines — or to purchase off-the-shelf foreign equipment to boost readiness more quickly. The debate is set to continue at an upcoming EU summit, where leaders are expected to adopt a defence readiness roadmap featuring key “flagship” initiatives such as an Eastern Flank drone wall.

The Commission is currently reviewing applications from 19 member states seeking financing from the €150 billion SAFE defence loan programme, with first disbursements anticipated by the end of the first quarter next year.

ASD Secretary General Camille Grand welcomed rising budgets and closer industrial collaboration but stressed the need for consistency. He warned that sustained investment is necessary to prevent repeating past cycles of underfunding. He added that a substantial share of defence procurement continues to go to non-European suppliers, underscoring the importance of strengthening “supply chain sovereignty” to ensure that European spending reinforces Europe’s own industrial base.