Europeans Ramp Up Purchases of Locally Produced Arms Amid Security Concerns and Industrial Revival

In recent years, European nations have significantly increased their defense spending and shifted toward greater reliance on domestically produced weapons and equipment. This trend reflects a strategic push for sovereign defense capabilities, economic reinvestment, and reduced long-term dependence on external suppliers, particularly in response to Russia's invasion of Ukraine and evolving transatlantic dynamics.

Defense budgets across the European Union reached a record €381 billion in 2025, marking a sharp rise of nearly 63% since 2020. Procurement and equipment investment have grown even faster, with many countries channeling funds into local industries to rebuild stockpiles depleted by aid to Ukraine and to meet NATO commitments. Analysts forecast that European defense companies could see revenue from regional customers grow by an average of 10.5% to 11.5% annually over the next decade.

A key driver has been the emphasis on "buy local" policies. Governments aim to keep taxpayer money circulating within their economies while expanding industrial capacity in critical areas such as ammunition, armored vehicles, air defense, and drones. For instance, EU initiatives like the European Defence Industry Programme (EDIP) and the Act in Support of Ammunition Production (ASAP) have supported joint procurement and capacity-building, favoring European content. Indigenous production now accounts for a substantial share of the market, projected to grow at a faster rate than overall defense spending.

Notable Examples of Local Expansion

Countries like Germany have seen domestic defense orders double in recent periods, with firms such as Rheinmetall reporting strong growth in ammunition and vehicle production. Eastern European nations and the Nordic-Baltic region have similarly prioritized local or intra-European contracts for tanks, artillery, and missiles. France, Italy, Sweden, and the UK continue to bolster their national champions through large-scale programs in aerospace and naval systems.

Ammunition production offers a striking illustration of this shift. EU capacity surged from around 300,000 rounds per year in 2022 to an estimated 2 million by the end of 2025 — a pace far exceeding peacetime norms. Joint efforts have helped replenish stocks while creating jobs and strengthening supply chains.

While overall European arms imports have more than tripled in volume during 2021–2025 (making the region the world's largest arms importer), much of the growth in local purchases has occurred alongside this. The U.S. share of European NATO imports has declined from 64% to 58%, with increased sourcing from European suppliers like France and Germany, as well as diversified partners. Intra-EU transfers and domestic contracts have gained ground, supported by new funding mechanisms and "Buy European" preferences that cap non-EU content in collaborative projects.

Economic and Strategic Motivations

This move toward local arms procurement serves multiple goals:

• Strategic autonomy: Reducing vulnerability to supply disruptions or policy shifts from major allies.
• Industrial revival: Revitalizing sectors from steel to high-tech manufacturing, with companies expanding facilities and hiring.
• Economic multiplier effects: Defense spending is increasingly viewed as an investment that generates domestic jobs, innovation, and exports.

European defense industry turnover reached around €148 billion in 2024, with exports also rising. Employment in the sector stands at approximately 500,000 people, concentrated in key nations such as France, Germany, Italy, Spain, and Sweden.

Challenges remain, including fragmented markets, supply chain bottlenecks (especially in semiconductors and advanced components), and the need for faster procurement processes. However, political momentum — including higher NATO spending targets and EU financial tools like the SAFE loan facility — continues to accelerate the trend.

Outlook for the Future

As Europe enters 2026 and beyond, the focus on local arms production is expected to intensify. Initiatives promoting collaborative development of next-generation systems (drones, AI-enabled defense, and integrated air defense) aim to close capability gaps while fostering a more competitive and resilient European defense industrial base.

This rearmament wave not only addresses immediate security needs but also positions Europe as a stronger player in global defense markets. By prioritizing locally produced weapons, European governments are investing in both their security and their economic sovereignty for the long term.

The shift marks a departure from decades of underinvestment, transforming defense from a budgetary afterthought into a strategic priority that blends military readiness with industrial policy.

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