Report
Europe’s new military-industrial complex by the numbers
During 2025, the stock-market performance gap between leading US defense firms and their European counterparts widened dramatically in favor of the latter.
The military-industrial complex is growing in both size and power at every global crossroads, driven by wars and by financial markets that, alongside nation-states, are pouring trillions into rearmament. It is expanding most rapidly in Europe. According to European Council data, between 2014 and 2024 overall military expenses in EU countries rose in real terms by 121 percent, while outright weapons spending shot up 325 percent. The Re-Arm Europe plan (2025-2030), approved by the EU’s political, economic and financial elites, calls for another €800 billion in additional military expenditures.
Inside the EU as well, the military-industrial complex appears to set the agenda and content of foreign policy, common defense and industrial policy, with private interests mixed in with politics. In Brussels people joke that the CEO of Germany’s Rheinmetall is really the acting “EU commissioner” for foreign affairs and defense. This gravely harms our democracies and freedoms – while boosting the share prices of his company and other European defense multinationals to an unparalleled degree.
A study conducted by Mediobanca’s Research Department and covering 40 multinationals in the arms sector confirms, on one hand, that the US players are three times larger than European rivals (a point underlined in Mario Draghi’s paper on EU competitiveness). Yet it also shows that contrary to what one might expect, European defense giants are in fact the chief beneficiaries of fresh cash from the financial markets.
During 2025, the stock-market performance gap between leading US defense firms and their European counterparts widened dramatically in favor of the latter. While the big American companies showed a decline the first two months of the year – Lockheed Martin down 13.0%, Northrop Grumman down 6.5%, General Dynamics down 8.0% – shares in Europe’s main defense groups soared. By March the FTSEurofirst 300 Aerospace & Defence index had hit an all-time high, up 34.4% since January and 182.2% over three years.
The pivotal moment that gave a further jolt to this trend came at the end of February. Mounting geopolitical tensions, plus US pressure on European allies to raise their own defense spending well beyond the minimum floor of 2% of GDP, pushed the European Commission and Council to set a 3- or 4-percent target (outside budget caps) for individual states and to earmark €150 billion of the EU budget for new arms purchases.
On 3 March every listed defense stock showed an extraordinary single-day leap: BAE Systems gained 15 percent, Leonardo 16, Thales 16, Rheinmetall 14 and Saab 12. Those jumps piled on top of earlier 2025 gains. Italy’s Leonardo broke €47 a share, its highest price in two decades and roughly 495% above early March 2022; Germany’s Rheinmetall reached €1,112, up a record 695% over the same period. And as of the time of writing, this rising trend shows no sign of stopping.
Prospects for peace in Ukraine, analysts say, could trigger a sharp but temporary pullback – up to a 20 percent drop in defense shares – yet national rearmament drives, other armed conflicts and broader power rivalries are keeping interest in aerospace and defense stocks high on the financial markets.
Although US companies still dominate turnover and total R&D investment, and although Europe suffers from some fragmentation because there is no coordination between purchases by national militaries, one cannot claim the European arms industry lacks weight or dynamism in terms of revenue growth and share performance.
According to further SIPRI data, between 2022 (the start of the Ukraine war) and 2023 several European firms logged double-digit jumps in military sales: JSC Ukrainian Defense Industry +69% percent; Turkish Aerospace Industry +45%; Germany’s Diehl +30%; Norway’s Kongsberg Gruppen +27%; Turkey’s Baykar +25%; Czechoslovak Group +25%; Sweden’s Saab +16%; and Germany’s Rheinmetall +10%. Looking at capital investment versus 2019, European players rose 30.8 percent – led by Germany’s Rheinmetall and Hensoldt at +39.0% – outpacing US players, which only gained 23.4 percent.
In a global landscape of spreading conflicts and swelling arms budgets, orders keep climbing. BAE Systems’ backlog grew from €58.7 billion in 2020 to €93.7 billion in 2024, up 60 percent on submarine, frigate and fighter-jet contracts. Rheinmetall’s orders grew no less than 293%, from €14.0 billion in 2020 to €55.0 billion by mid-2024. KND S – formed by Germany’s Krauss-Maffei Wegmann and France’s Nexter – saw a 130% surge in just one year, 2022-2023.
The European military-industrial complex is just as prominent in exports. From 2019-2023, European firms accounted for 33 percent of the value of global arms sales, versus 41 percent for US companies, 11 percent for Russian, 6 percent for Chinese and 2 percent for South Korean firms. Nonetheless, export profiles differ sharply when looking at the share of exports out of total revenue for single multinationals: US groups still rely on their home market for 78 percent of their revenue, earning only 22 percent abroad (13 percent in Asia, 9 percent in Europe). European groups are more diversified: half their turnover comes from Europe, 28 percent from the US and 22 percent from the rest of the world.
The two Italian giants, Leonardo and Fincantieri, are the most export-oriented, with 82 percent of sales abroad, followed by German companies at 70 percent, French at 65, British at 61 and Swedish at 58. This reality contradicts the claims on the subject in Draghi’s “Report on the future of European competitiveness.”
This article is an excerpt from Sbilanciamoci!’s ebook “Europa a mano armata” (“Europe: Weapons in Hand) edited by Futura D’Aprile and downloadable at https://sbilanciamoci.info.
Originally published at https://ilmanifesto.it/ue-il-nuovo-complesso-militare-industriale on 2025-06-17