Momentum is building across Europe to bolster its defences.

The President of the European Commission, Ursula von der Leyen, has unveiled a new European rearmament plan that could free up to EUR800 billion for defence spending for member states.

The ReArm Europe Plan – announced on 4 March two days before a Special European Council meeting – aims to address the urgent need to support Ukraine and bolster European security.

“We are in an era of rearmament”, von der Leyen stated.

Split into five parts, the plan includes a “new instrument” that will provide EUR150 billion in loans for defence investment into pan-European capabilities such as air and missile defence, artillery systems, missiles and ammunition, drones and anti-drone systems and cyber capabilities. By jointly procuring priority equipment, costs will be reduced and interoperability strengthened, the president said.  

The EU’s debt rules will also be relaxed, allowing members to increase defence spending without fear of fines or penalties. This will enable members to raise spending by 1.5% of GDP on average, creating fiscal room of close to EUR650 billion over a four-year period, the president continued. 

In addition, more of the EU’s budget will be allocated towards defence and more private capital will be mobilised through the European Investment Bank. 

The announcement did not detail how private investment will be mobilised. Although, one approach, suggested to DSEI in February by General (retd) Philippe Lavigne, NATO's former Supreme Allied Commander Transformation, is for governments to match or offer subsidies. 

This rearmament plan follows a slew of defence spending announcements recently, with Belgium, Denmark, and the UK outlining plans for surpassing 2% of GDP. Germany’s next coalition government has also just announced plans to loosen debt rules to enable higher military spending.