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17/05/2017

Europe ramps up defence budget on heightened threat

London, UK

Defence budgets across Europe will grow by 1.6 percent on average annually for the next five years to reach $245 billion in total by 2021, according to new analysis released by IHS Markit, a world leader in critical information, analytics and solutions.

Across Europe, defence expenditure is expected to return to 2008-9 peak spending levels by 2020, with increases in spending primarily focused on improving readiness and accelerating equipment modernization, in response to amplified threat levels in the region.

“While countries are still dealing with ongoing budgetary constraints and economic uncertainty, elevated threat levels mean that there’s arguably more political support for increasing defence spending at the moment than there has been in the last ten years,” said Fenella McGerty, principal analyst, Jane’s by IHS Markit. “However, progress towards the implementation of the NATO 2 percent of GDP target in Europe as a whole will be slow.”

France to hit within striking distance of NATO target

The French Armed Forces are in a period of reform designed to raise homeland security as a prime military priority and to address contemporary threats effectively. As a result of the series of upward revisions over the last two years, the French budget now comes to just over 1.9 percent of GDP - within striking distance of the NATO mandate.

“The French defence budget was bolstered following the terrorist attacks in Paris in 2015 and Nice in 2016, with around $4 billion added to the four year budget projection,” McGerty said. “Jane’s expects additional upward revisions to defence funding plans, given that the two final 2017 election candidates, Emmanuel Macron and Marine Le Pen, support increasing spending to 2 and 3 per cent of GDP respectively,” she added.

Eastern European growth outpaces West

While defence spending in Western Europe returned to mild growth in 2016 following a six-year retreat, Eastern Europe is currently one of the fastest growing regions in the world. Defence expenditures in all countries in this sub-region are expected to be higher in 2021 than in 2016.

“Countries in the East of the region began implementing significant increases in 2014 and although such increases are impressive, the low level of spending in Eastern Europe limits the impact on global trends,” McGerty said. Total defence spending in Eastern Europe came to $24.6 billion in 2016, compared to $202 billion in the West of the region.

Turkey spends to secure borders

In the wider region, the Turkish Armed Forces are the second-largest military force in NATO and are presently undertaking a range of procurement programmes to ensure that the size of the force is matched with sufficient capability.

Though Turkey aspires to become a significant military actor capable of projecting force throughout the region, it currently remains preoccupied with countering separatist and insurgent forces in the guise of Kurdish militants and Islamic State radicals along its borders and within the state.

Heightened security concerns combined with the need to counter a high rate of inflation and a drop in the value of the lira against the dollar will likely lead to strong increases in the Turkish defence budget. Jane’s expects that by 2021, Turkish defence spending will reach $11.7 billion, 11% higher than the current estimated budget of $10.6 billion.

Equipment such as electronic warfare jammers; reconnaissance aircraft; air defence assets, and radars will likely be given priority in the near term as Turkey looks with increasing unease along its borders.


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