The European Defence Fund precursor programmes and the state of the European market for defence

ABSTRACT The fragmentation of the European defence market hampers the establishment of a unified European defence. The European Union (EU) has implemented initiatives like the Coordinated Annual Review on Defence, Permanent Structured Cooperation, and the European Defence Fund (EDF) to address this issue. However, a comprehensive understanding of the European defence market and its consolidation, which is essential for evaluating these programs, remains insufficient. This article aims to observe the configuration of the European defence market and its evolution over time, exploring potential trends towards consolidation. The authors contend that despite the fragmented nature of the European defence market, a few larger companies from four countries hold significant positions. They also identify a positive trend towards consolidation, although institutional incentives perpetuate market fragmentation. To delve deeper, the authors analyze the funding allocation for defence companies through the preparatory programs of the European Defence Fund. Their analysis encompasses 65 projects awarded to 430 companies between 2016 and 2020, supplemented by insights from three focus groups and an expert survey conducted in the Netherlands, Italy, and Sweden. This article suggests avenues for future research on the EDF, emphasizing the need for a comprehensive understanding of market consolidation and the efficacy of current initiatives.