European defence sector's turnover surges 13.8% to €183 billion in 2024

The turnover of European defence companies rose by 13.8% year-on-year in 2024 with direct employment in the sector also rising to its highest level ever recorded as Europe races to rearm to face a belligerent Russia, a new report highlights.

Turnover for the 4,000 companies the Aerospace, Security and Defence Industries Association of Europe (ASD) represents grew by 10.1% overall to €325.7 billion, its newly-released annual report shows.

Defence led the growth with a yearly rate of 13.8% — compared to a 6% rise in civil aviation — and a €183.4 billion turnover.

Direct employment, meanwhile, rose by 6.9% to 1,103,000 - the highest level recorded. The defence sector once again accounted for most of that growth, with 633,000 in direct growth, up 8.6% year-on-year.

“Our sectors are not only vital to Europe’s economy. They are first and foremost essential for Europe’s security, connectivity, sustainability ambitions – ultimately for its sovereignty and position on the global stage amid a quickly shifting and increasingly unpredictable geopolitical and technological landscape," Micael Johansson, ASD president and CEO of Saab, wrote in a statement.

"Investment in our industries is investment in Europe’s competitiveness, sustainability, resilience, and sovereignty. The next multiannual EU budget must reflect this as a priority," he added.

Defence sector leads surge in European military production

European Union member states have sharply increased their defence spending since Russia launched its full-scale invasion of Ukraine in early 2022, with intelligence reports warning that Moscow could target another European country before the end of the decade.

As a result, member states spent €343 billion on defence last year, up from €251 billion in 2021.

The European Commission is trying to spur even more investments in the sector with a series of packages that allow EU states more fiscal leeway for defence spending for instance, or to slash bureaucracy for defence companies so they can expand and therefore produce more and faster.

The proposal for the bloc's next seven-year budget also reflects that shift, with €131 billion earmarked for defence — up from roughly €10 billion in the 2021-2027 budget.

But divergences of opinion persist among member states over whether to prioritise European-made equipment, which can take longer to deliver as manufacturing lines sputter into war production, or to buy off-the-shelf foreign equipment, and over which capabilities should be invested in as a matter of urgency.

EU leaders are expected to endorse a defence readiness roadmap tabled by the Commission in October that outlined four so-called flagship projects including a drone wall as part of an Eastern Flank Watch at a summit later this month.

The EU executive is also at the moment reviewing the plans submitted by the 19 member states that have requested funds from the €150 billion SAFE defence loan scheme, with the aim of starting to disburse the money by the end of the first quarter of next year.

"Rising defence budgets and deeper industrial cooperation are strong signals," ASD Secretary General Camille Grand also said in the statement.

"However, investments must be sustained over a prolonged period to avoid repeating past mistakes," he added.

"Also, a significant share of defence procurement still flows to non-European suppliers, highlighting the urgent need to reinforce supply chain sovereignty and ensure that European investments strengthen Europe’s own industrial capabilities," Grand concluded.