Europe Wants a Bigger Defense Industry. This Is What It Looks Like Now

As European countries increase their defense spending to counter the threat from Russia, China, and Iran, can Europe’s arms manufacturers up their game?

Chancellor of the Exchequer Rachel Reeves speaks to media during a visit to Rheinmetall BAE Systems Land (RBSL) in Telford, England, on March 24, 2025. Jacob King - WPA Pool/Getty Images

European countries are ramping up their defense spending in response to growing threats from not just Russia, but also China and Iran, amid growing concern that the United States could withdraw its military umbrella from the continent.

And the European Union is keen to make sure the extra money is spent in Europe itself.

On March 18, the EU unveiled a strategy document called Readiness 2030, which encouraged members of the 27-nation bloc to buy as much of their military equipment as possible from suppliers in Europe, rather than the United States or further afield.

The Aerospace, Security, and Defence Industries Association of Europe, which represents 3,000 companies, says the combined industries recorded a turnover of 290.4 billion euros ($317 billion) in 2023, a year-on-year increase of 10 percent.

So who makes Europe’s military planes, ships, and other equipment—and where are the gaps?

Planes: Battle for the Skies

Air superiority has been considered—as far back as the Battle of Britain in 1940—to be essential to defend a country against its invader, and the backbone is the fighter jet.

In 2025, four main fighter jets are being flown by Europe’s air forces, three of which are made in Europe, and one in the United States.

A consortium of firms from Britain, Germany, Italy, and Spain together makes the Eurofighter Typhoon fighter jet.

A total of 729 Typhoons have been ordered, and almost 600 are in use by the air forces of Germany, Austria, Spain, Italy, the United Kingdom, Saudi Arabia, Oman, and Qatar.

Most Typhoons—such as those flown by Britain’s Royal Air Force—are equipped with a 27mm Mauser cannon, ASRAAM, Meteor and AIM-120 AMRAAM air-to-air missiles, Paveway II and Paveway IV precision-guided bombs, and both Storm Shadow and Brimstone air-to-ground missiles.

The three biggest firms in the Eurofighter consortium are Airbus, BAE Systems, and Leonardo.

Leonardo, from Italy, also assembles U.S.-manufactured F-35 Lightning II fighters for the Italian and Dutch navies.

The F-35 Lightning II, designed and built by the U.S. giant Lockheed Martin, is also the mainstay of the air forces of Belgium, Denmark, Finland, Norway, Poland, and Switzerland.

The French snubbed the Eurofighter project, and their air force is mainly equipped with the Dassault Rafale.

In August last year, Dassault announced it had signed a deal to sell 12 Rafales to Serbia.

The Rafale is also in use with the air forces of Greece, Egypt, India, and Croatia, and Indonesia has also agreed to buy several of the jets.

Saab, from Sweden, produces the Gripen fighter jet, which is in use with the air forces of Brazil, Hungary, South Africa, Thailand, the Czech Republic, and Sweden itself.

In the past, many air forces in Eastern Europe flew Soviet-era MIG fighter jets, but the last of those was phased out by Croatia in December 2024.

Ships, Submarines: The Tide is Turning

Many countries in Europe have a proud shipbuilding past, especially Britain and Germany, who famously engaged in a competition, between 1906 and 1914, to see who could construct the most battleships.

In June 1916, many of those battleships clashed at the Battle of Jutland, during World War I.

One of the biggest shipbuilding companies in Europe is British Aerospace Systems (BAE), which makes everything from aircraft carriers to submarines.

BAE was created in 1999 when British Aerospace, an aircraft, munitions, and naval systems manufacturer, bought rival Marconi Electronic Systems, a defense electronics and naval shipbuilding subsidiary of the General Electric Company (GEC).

Germany’s biggest military shipbuilder is Naval Vessels Lürssen—which owns yards in Hamburg, Wilhelmshaven, and Wolgast— building frigates, corvettes, offshore patrol vessels, and fast patrol boats.

France’s main military shipbuilder is the Naval Group, which is part-owned by the French state and partly by the company Thales. It has shipyards at Brest, Lorient, and Toulon.

Naval Group, which can trace its origins back to the 17th century, built the Charles de Gaulle aircraft carrier and the Suffren, the French navy’s first Barracuda-class nuclear submarine, in 2019.

Another French company, Safran, supplies navigational technologies for nuclear submarines, which have to operate underwater in an environment where they cannot use global positioning satellites.

Spain’s state-owned naval shipbuilder, Navantia, has yards in El Ferrol and La Coruña, both in Galicia.

The crew waits for France's Defence Minister Sebastien Lecornu onboard the aircraft carrier Charles de Gaulle in Lembar, Lombok, Indonesia on Feb. 1, 2025. Sonny Tumbelaka/AFP via Getty Images

The Italian defense company, Fincantieri, is heavily involved in shipbuilding and submarine systems, based in Genoa, Ancona, and Marghera, near Venice.

It built the aircraft carrier, Cavour, for the Italian Navy in 2008 and has also built submarines for the Italian and German navies and a range of other warships, including two FCX07 fast attack vessels for the United Arab Emirates Navy.

Artillery: More Bang for European Buck

Since the war in Ukraine began in February 2022, and European countries began supplying Kyiv with weapons, production of artillery and ammunition has jumped across the continent.

The Economist reported on March 20 that Europe’s two biggest gunpowder manufacturers, Chemring Nobel—from Norway—and France’s Eurenco, have doubled capacity since 2022.

There are several major producers of artillery and ammunition in Europe.

Having acquired the Swedish artillery firm Bofors, BAE produces naval guns, like the Bofors 40 Mk4, and the 57mm Mk110, which is fitted to the U.S. Coast Guard’s National Security Cutter.

It also produces a range of ammunition, from bullets for small arms to 105mm artillery rounds.

Nammo—which is owned in equal shares by the Norwegian government and the Finnish company Patria Oyj—says on its website it is “one of the world’s leading providers of specialty ammunition, shoulder-fired weapons, and rocket motors.”

Germany’s Rheinmetall produces large and medium caliber weapons and munitions, and propulsion systems, and says on its website: “Rheinmetall has laid the foundation for a future 100kW laser weapon system, demonstrating its fundamental feasibility.”

Tanks: Yesterday’s Weapon?

In recent years, there has been an argument put forward that tanks have been made obsolete by drones.

The drone-assisted Azerbaijani victory over Armenian forces in Nagorno-Karabakh in 2023, and the vulnerability of both Russian and Ukrainian tanks in the current conflict, have been used to support that argument.

Tanks, which cost millions of pounds, can be destroyed by drones, which cost just a few hundred dollars.

But Europe’s armed forces continue to invest in tanks, and efforts are being made to improve them and make them fit for purpose in the drone age.

BAE—which makes tanks like the Swedish-made CV90 IFV—has invented the ADAPTIV system, which it claims renders tanks, “invisible to infra-red and other surveillance technology.”

The company says on its website, ADAPTIV involves “lightweight hexagonal pixels which are electrically powered by the vehicle’s systems.”

Milrem, from Estonia, is pioneering unmanned, robotic tanks.

It makes the integrated Modular Unmanned Ground System (iMUGS), the Combat Unmanned Ground Systems (CUGS)—miniature tanks that can support infantry—and the Type-X robotic combat vehicle.

At the DSEI (Defence and Security Equipment International) exhibition in London in September 2025, Milrem signed a memorandum of understanding with the Swedish firm Clavister to “develop and collaborate on AI-powered cyber security for unmanned military vehicles.”

But it may be several years before a large, unmanned tank with a heavy gun is ready for the battlefield.

A robotic tank, designed by Estonian company Milrem Robotics, is on show at the DSEI exhibition in London on Sep. 12, 2023. Chris Summers/The Epoch Times

The mainstay of the armored corps of most European armies are the German-made Leopard 2, and France’s Leclerc XLR, Britain’s Challenger 2, although Poland recently took delivery of the first of 250 U.S.-manufactured M1A2 Abrams tanks.

The Leopard 2 tank is manufactured by KNDS (formerly Krauss-Maffei Wegmann), with significant support from Rheinmetall, while KNDS France (formerly Nexter Systems) makes the Leclerc XLR.

On its website, KNDS France says the upgraded Leclerc XLR will have, “an anti-IED jammer system, anti-RPG [rocket-propelled grenade] 360 degree protection and mine protection.”

The Challenger 2 is soon to be replaced by Challenger 3, a joint venture between BAE and Rheinmetall.

Drones: Race to Scale-up Production

The Ukraine conflict has showcased just how lethal drones can be, not only on the battlefield itself but also far from the frontlines.

Russia has used drones—as well as missiles—to attack Ukraine’s energy infrastructure, and civilian targets in Kyiv and other cities, while Ukraine has targeted cities as far away as Moscow, as well as airfields and ships.

Unmanned aerial vehicles (UAVs) have been in use for two or three decades, but the technology involved has come on leaps and bounds in the past five years.

When Azerbaijan defeated Armenia in the Nagorno-Karabakh conflict in 2020, and again in 2023, a key factor was Baku’s use of hundreds of Turkish-made Bayraktar TB2 drones.

In this December 2023 article in the RAF’s magazine, British Flight Lieutenant Chris Whelan wrote that other nations were seeking to emulate Azerbaijan’s success. He said drones were “likely to become a permanent fixture of the battlefield of the future.”

Baykar, the company that makes the Bayraktar TB2, is based in Esenyurt, near Istanbul. It plans to open a subsidiary in Morocco, according to Moroccan news platform Le360.

Last year, it also announced plans to build a factory near Kyiv that would employ 500 people and manufacture either the Bayraktar TB2 or TB3 drones for the Ukrainian military.

Ukraine has already manufactured more than 1 million first-person view (FPV) drones.

Equipped with cameras and mapping systems and controlled by a remote console, they allow their operators to fly them—like in a video game—directly to the target, making them far more accurate than missiles and artillery, according to a Reuters analysis.

The major defense companies in Europe are now frantically trying to step up their production of drones, and arguably catch up with Turkish and Israeli manufacturers.

Safran—which was created in 2005 when the French engine manufacturer SNECMA merged with defense electronics firm SAGEM—developed the Patroller, a tactical, long-endurance drone, which is used by the French army.

BAE also makes underwater drones, like the Herne XLAUV.

Airbus is also working on a number of UAVs, including the Eurodrone—which will have a payload, excluding fuel, of 2.3 tons and a maximum flying time of 40 hours—and SIRTAP, a surveillance and maritime intelligence drone which can fly up to 20,000 feet and provide an eye in the sky during the day or at night.

On March 26, Airbus reportedly unveiled a new drone, known as LOAD (Low-cost Air Defense).

Airbus, in a statement cited by defense journal Janes, said: “Since each LOAD drone can take out up to three kamikaze drones with its guided missiles, they are particularly suitable for cost-effective defense against large swarms of drones, which can saturate and pose challenges even for complex ground-based air-defense systems.”