European militaries prepare for budget battle

Quite how a looming period of recession initiated by the coronavirus crisis will impact European defence budgets remains to be seen, but it is highly likely that a recent upward spending trend will be slowed – if not halted altogether.

After facing years of vocal criticism from the USA, more European NATO members had been making strides over the past couple of years towards meeting a target of spending at least 2% of their national GDP on defence. But with economies now derailed after coronavirus disruption and business lockdowns, achieving such a metric could mean a real-term reduction in investment.

Speaking at a Brussels Forum event on 23 June, NATO secretary general Jens Stoltenberg stressed the need for nations to continue on their upward spending path, despite the huge impact of the pandemic.

“The reasons why we decided to invest in our security: terrorist threats, cyber, the shifting balance of power with the rise of China or a more assertive Russia – all of that is still there. So, we need to continue to invest in our security,” he says.

Supporting this view, Stoltenberg points to the positive contribution made by NATO militaries throughout the pandemic in supporting civilian society.

The EU, meanwhile, is working on the detail of its long-term budget plan for the 2021-2027 period, including commitments to defence, aerospace and security. Its allocation via the Multiannual Financial Framework will account for around 20% of NATO’s entire spending.

Airbus Defence & Space chief executive Dirk Hoke in mid-June also urged European nations to hold firm on defence and security investment.

“I strongly believe that more than ever, we have to secure the [European] defence, space and security budgets in order to cope with the challenges that we are currently facing,” he says. “Strong programmes can accelerate the recovery phase. By supporting defence projects, we also can stabilise the whole aerospace industry.”

And, cautions Hoke: “cutting budgets would undermine us in the next crisis”, while also costing high-value jobs and losing essential industrial skills.

In the UK, meanwhile, a long-awaited follow-on to its Strategic Defence and Security Review of 2015, originally scheduled for completion earlier this year, now appears set to be delayed into 2021, leaving uncertainty around some long-term investment priorities.

With an outline business case for the UK’s ambitious Tempest future combat air system programme due for delivery before the end of this year, funding clarity around its commitment to this and other major acquisitions will be eagerly awaited in the future Integrated Review.

The economic impact of the coronavirus crisis will take many years to overcome, so for defence ministries across Europe, the need to fight for long-term investment represents a significant battle, as other sectors such as health care and social welfare also call for increased backing.