European Defence Industrial Policy

The Commission's defence industrial policy is designed to promote competition, innovation, support SMEs and provide a strong industrial base for the Common Security and Defence Policy (CSDP).  At the heart of this policy is the 'Defence Package', designed to set out a modern policy and legislative framework to improve competitiveness, introduce greater transparency and cut unnecessary red tape.

Why is more competition necessary?

• The European defence market is highly regulated at a national level. Europe's defence-related industries (primarily the defence part of sectors such as aeronautics, space, electronics, land systems and shipbuilding) largely operate outside the internal market.

• Fragmented markets create red tape, hamper innovation and lead to duplication of defence programmes and research – undermining our global competitiveness and the effectiveness of the CSDP.

• Furthermore, reduced defence budgets and escalating development costs make it simply too expensive for any single European country to maintain a comprehensive national defence industrial base.

European defence industry background
The European defence equipment market is:

• technology and research-intensive (electronics, IT, transport, biotechnology and nanotechnology – with many important spin-offs in civil sectors, e.g. satellite navigation).
• The defence industry is mostly concentrated in six Member States (France, Germany, Italy, Spain, Sweden and the UK) although companies producing ancillary equipment and systems are found all over Europe.