MEPs call for improved financing options to support Europe’s defence readiness

In a new report, MEPs make proposals on how to remove hurdles for financing Europe’s defence industry.

The report “European Defence Readiness 2030: Assessment of Needs”, by the Committee on Security and Defence, examines Europe’s defence needs up to 2030 and identifies options to strengthen financing tools and better mobilise private investment to support the European Union’s defence readiness.

In an increasingly deteriorating security environment and the EU facing hybrid and conventional threats, MEPs stress the need for the EU to significantly ramp up investment in defence readiness. They welcome the proposals set out in the European Commission’s ‘ReArm Europe’ plan, as well as the Defence Readiness Roadmap 2030, which offer EU countries greater budgetary flexibility and encourage increased spending to strengthen the European Defence Technological and Industrial Base (EDTIB). At the same time, MEPs highlight several hurdles facing the European defence industry, including when it comes to defence industrial companies having better access to debt and capital financing.

Joint action key

Examining the practical situation faced by defence industry stakeholders, MEPs call for better support to start-ups and small and medium sized companies (SMEs) - which form an important part of the EDTIB - in particular when it comes to accessing credit, private debt and equity financing. They note that SMEs in the EDTIB face greater difficulties than those in other sectors in obtaining credit and equity financing, particularly due to irregular public procurement and payment delays between subcontractors, the exclusion of defence activities by some investors for image reasons and limited exit opportunities for defence assets on European capital markets.

MEPs also say EU countries need to ramp up their joint procurement of defence equipment to avoid continued market fragmentation, stating that future investments must prioritise cooperation, interoperability and joint procurement, making EU-level collaboration the rule within the European defence industrial sector. In this regard, they highlight the need to align the EU’s Readiness 2030 roadmap with the concrete numerical targets set out in the European Defence Industrial Strategy (EDIS), in particular by reaching at least 40% joint procurement by 2030, at least 35% intra-EU defence trade by 2030, and at least 50% procurement of EU-made defence products by 2030 and 60% by 2035.

More European Investment Bank support for defence

The report also calls for strengthened European supply chains and for the mandate and investment guidelines of the European Investment Bank to be adapted so it can better support the European defence industry. Looking ahead to the coming EU long-term budget negotiations, MEPs say it must support a comprehensive security approach through adequate and coordinated investment.

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Following the vote, rapporteur Christophe Gomart (EPP, France) said: "If Europe wants credible defence readiness by 2030, we must mobilise private investment alongside public funding. Private capital is not a substitute, but a multiplier: it accelerates production, strengthens the European defence technological and industrial base, and reduces our dependence on external suppliers. This report presents 14 innovative solutions to unlock private capital for European companies”.

The report was approved by 30 votes in favour, 4 against with 4 abstentions.

Next steps

The report will now be tabled for a vote in the European Parliament as a whole, which is expected to take place during the December session.