European Defence Strategy 2025: Roland Berger Study on Innovation and Industrial Resilience

Europe’s Defence Crisis: Why 2025 Is a Critical Tipping Point

The Roland Berger European Defence Study 2025 opens with an unambiguous assessment: Europe faces an existential security challenge that demands immediate, large-scale industrial and strategic action. With Russia allocating close to 9% of GDP to defence and more than 40% of its governmental budget to military spending, the threat landscape has fundamentally shifted from the post-Cold War assumptions that guided European security policy for three decades.

Russia’s military expansion plan targets adding 300,000 soldiers, 3,000 tanks, and 300 fighter jets by 2030 — numbers that dwarf current European production capacities. As EU High Representative Kaja Kallas stated in January 2025, Russia now represents an “existential threat” to Europe, a characterization that signals a paradigm shift in how European policymakers view continental security.

The study also highlights the weakening transatlantic alliance, arguing that greater European self-reliance is no longer optional but strategically imperative. This assessment comes at a moment when European defence inefficiency — characterized by overlapping programmes and disconnected national efforts — costs an estimated EUR 10.9 billion per year, according to the European Parliamentary Research Services. For readers exploring how complex strategic reports drive policy transformation, this study represents a defining moment in European security thinking.

European Defence Spending Surge: Country-by-Country Analysis

The Roland Berger European defence strategy 2025 study documents a dramatic acceleration in defence spending across the continent, with proximity to Russia strongly correlating with budget increases. Poland has emerged as the clear leader, nearly doubling its defence spending from 2.23% of GDP in 2020 to 4.12% in 2024 — the highest rate among European NATO members.

Germany’s trajectory is equally significant, rising from 1.51% to 2.12% of GDP and taking the historic step of exempting defence spending beyond 1% of GDP from its constitutional debt brake. France has remained relatively stable at approximately 2% of GDP but is now debating a dramatic increase to 5% of GDP — a figure that would represent a fundamental reorientation of French fiscal policy.

The Baltic states and Nordic countries are among the most aggressive spenders relative to their economies. Estonia reached approximately 3.4% of GDP in 2024, Latvia approximately 3.2%, and Greece approximately 3.0%. Sweden, which joined NATO in 2024, plans to raise spending to 3.5% of GDP by 2030, while the United Kingdom aims to reach 2.5% by 2027.

These figures represent a structural shift in European fiscal priorities. The question, as Roland Berger’s analysis makes clear, is not whether Europe will spend more on defence — it already is — but whether that spending will be coordinated, efficient, and directed toward the capabilities that actually matter for deterrence and defence in the modern threat environment.

The EUR 800 Billion Readiness 2030 Plan

The European Commission’s Readiness 2030 plan represents the most ambitious collective defence investment in European history. The initiative could potentially mobilise up to EUR 800 billion, structured in two components: EUR 650 billion freed from relaxed fiscal constraints over four years, allowing member states to increase defence spending without triggering excessive deficit procedures, and EUR 150 billion in EU-level loan packages for collective investment in cross-border defence capabilities.

The scale of this commitment reflects the magnitude of the industrial challenge. Roland Berger’s analysis demonstrates that Europe’s current defence production infrastructure was designed for peacetime maintenance, not wartime replenishment. Transforming this industrial base requires not just budget increases but fundamental changes in procurement processes, supply chain structures, and the relationship between civilian and military manufacturing sectors.

The study emphasizes that funding alone is insufficient — Europe must simultaneously address institutional fragmentation, procurement delays, and the structural barriers that prevent efficient resource allocation across 27 member states. Without coordination, even EUR 800 billion risks being spent on duplicative national programmes rather than interoperable, strategically coherent capabilities.

Europe vs. Russia: Military Capability and Production Gaps

The Roland Berger defence study provides a sobering comparison of European and Russian military capabilities, revealing both strengths and critical vulnerabilities. In raw numbers, Europe (EU 27 + UK) maintains 1,520,000 active soldiers, 1,700 combat aircraft, 4,400 main battle tanks, and 110 frigates and destroyers — figures that compare favorably with Russia’s 1,134,000 soldiers and 1,200 combat aircraft.

However, the production gap tells a fundamentally different story. Europe currently produces approximately 0.6 million artillery rounds per year, while Russia produced 2.1 million in 2024 and projects 2.7 million by 2030. European cruise missile production stands at roughly 130 units annually — a fraction of Russia’s approximately 1,000 per year. One leading European ammunition supplier produced just 12,000 rounds of 155mm artillery per year before 2023, demonstrating how decades of peace-dividend cuts hollowed out production capacity.

The consumption rates from the Ukraine conflict starkly illustrate the problem. During the summer of 2023, 155mm artillery consumption reached close to 10,000 rounds per day — meaning that at pre-2022 European production rates, a single day of intense combat consumed nearly an entire year’s output from a major supplier. The study argues that without radical industrial scale-up, Europe’s existing stockpiles would be exhausted within weeks of a high-intensity conflict.

From Old World to New World: Modern Warfare Reshaping European Defence Strategy

Perhaps the most strategically significant insight in the Roland Berger European defence strategy 2025 study is its analysis of how modern warfare is rendering traditional defence paradigms obsolete. The study describes a shift from the “old world” of small numbers of ultra-sophisticated, expensive platforms to a “new world” characterized by high-volume, affordable, software-defined, connected systems.

The Ukraine conflict has served as a real-world laboratory for this transformation. The study documents a threat-counterthreat cycle of approximately one year — meaning that defensive countermeasures against new weapons systems are typically fielded within twelve months. This pace of adaptation renders traditional 15-20 year weapons development cycles dangerously slow and economically unsustainable.

The study analyzes six distinct threat categories that Europe must prepare for simultaneously: invasion risk, missile strikes, satellite jamming, information warfare, cyberattacks, and energy blackmail. Hybrid warfare data from CSIS (2023-2024) shows that 27% of Russian hybrid attacks targeted transportation systems, 27% targeted government facilities, and 21% focused on critical infrastructure including pipelines and power grids — demonstrating the blurring of military and civilian domains.

As Senior Partner Eric Kirstetter notes: “We’ve entered a ‘new world’ in which traditional military platforms converge with high-volume, affordable and software-defined technology. Civilian innovators can help defence firms remain agile and cost effective.” This insight is central to the study’s recommendations for industrial transformation.

The Deterrence Threshold Framework for Military Readiness

Roland Berger introduces the “deterrence threshold” concept as a quantitative framework for measuring European military readiness. Rather than relying on abstract spending targets or capability wish lists, the deterrence threshold establishes specific annual production output targets that Europe must reach to maintain credible deterrence against potential aggressors.

The methodology benchmarks against projected Russian military production in 2030 (assuming 25% growth from 2024 levels) plus a 10% “overmatch margin” to ensure European superiority. The resulting targets reveal the scale of the industrial challenge:

• Artillery rounds: Target 2.9 million per year (current EU production: 0.6 million — 4.8x scale-up required)
• Main battle tanks: Target 370 per year (current EU: approximately 115 total including refurbished — 3.2x scale-up)
• Cruise missiles: Target 1,380 per year (current EU: approximately 130 — 10.6x scale-up)

These figures demonstrate that incremental improvements to existing production lines will be wholly insufficient. Reaching the deterrence threshold requires fundamental industrial restructuring, new production facilities, expanded supply chains, and — critically — the integration of civilian manufacturing capacity into the defence production ecosystem. For those analyzing how strategic frameworks shape industrial policy, the deterrence threshold represents a genuinely novel contribution to European security analysis.

Four Industrial Pathways to Scale Defence Production by 2030

The study outlines four complementary industrial pathways (A through D) for reaching the deterrence threshold, each with distinct characteristics, timelines, and investment requirements:

Pathway A — Peacetime Production Increase: Incremental improvements to existing facilities through additional shifts, optimized inventory management, and workforce expansion. This is the fastest to implement but offers the smallest capacity gains, typically 20-40% increases from existing baselines.

Pathway B — Focused Capital Investment: Construction of new production lines or major upgrades to existing facilities. This pathway delivers substantial capacity increases but requires 3-5 years for planning, construction, and qualification — plus significant capital expenditure that defence companies may be reluctant to commit without guaranteed long-term orders.

Pathway C — Civilian Industry Outsourcing: Engaging non-defence industries to produce components at lower supply chain tiers. France’s defence procurement agency has already begun engaging automotive, chemical, agrochemical, and energy firms to identify manufacturing synergies, including workforce sharing and facility dual-use arrangements.

Pathway D — Smart, Affordable Mass: The most transformative pathway, promoting software-defined, modular, mass-producible autonomous systems that use commercial off-the-shelf components. Some “new defence” companies following this approach have achieved remarkable efficiency gains: 50% reduction in production time, 95% reduction in tooling, and 50% reduction in total parts count.

The study emphasizes that no single pathway is sufficient — Europe must pursue all four simultaneously, tailored to specific capability domains. Pathway D represents the long-term strategic direction, but Pathways A and C are essential for addressing the immediate production gap while longer-term investments mature.

Smart Affordable Mass: Software-Defined Defence Systems

The concept of “smart, affordable mass” represents what Roland Berger identifies as a paradigm shift in defence equipment design and production. Unlike traditional military platforms — which are designed for maximum performance, produced in small numbers, and upgraded over decades-long lifecycles — smart mass systems prioritize volume, speed of deployment, and continuous software-driven capability updates.

The approach draws directly from lessons in the Ukraine conflict, where relatively inexpensive commercial drones and modified civilian technologies have proven devastatingly effective against sophisticated, expensive military platforms. A $500 commercial drone modified with an explosive payload can destroy a $5 million armored vehicle — fundamentally altering the cost calculus of modern warfare.

Key characteristics of smart mass systems include: modular hardware architectures that enable rapid production scaling; software-defined capabilities that can be updated in the field without hardware modifications; extensive use of commercial off-the-shelf (COTS) components that leverage civilian supply chains; and design-for-manufacturability principles that enable production by non-traditional defence manufacturers.

The efficiency gains documented in the study are striking. Companies following Pathway D approaches have demonstrated that production times can be halved, tooling requirements reduced by 95%, and part counts cut by 50% compared to traditional defence manufacturing. These metrics suggest that smart mass production could eventually bridge the quantity gap with Russia without proportionate budget increases.

Defence R&D Gap: Europe vs. US and China

The Roland Berger European defence strategy 2025 study reveals a troubling R&D disparity that threatens Europe’s long-term technological competitiveness. In 2022, the EU spent EUR 18 billion on defence R&D — representing just 3.7% of total R&D spending. Compare this with the United States at EUR 80 billion (8.5% of total R&D) and China at EUR 42 billion (10.3% of total R&D).

The trajectory is equally concerning. China’s total R&D budget grew 18-fold from EUR 22 billion in 2004 to EUR 934 billion in 2024, while the EU grew only 2.5-fold from EUR 190 billion to EUR 309 billion. This divergence means that even if Europe maintains its current R&D share, the absolute gap with competitors will continue widening.

The study recommends creating a “Catalyst Agency” — potentially an expanded European Defence Agency (EDA) inspired by models like DARPA, ESA, or CERN — to boost early-stage funding, create a European Defence Technology Roadmap, and break the “TRL 7 wall” that prevents promising research from reaching production. Co-locating research facilities near industrial hubs would accelerate the technology transfer process and reduce the time from concept to fielded capability.

The report stresses that many critical technologies are inherently dual-use — artificial intelligence, quantum computing, advanced materials, autonomous systems — making civil-military R&D convergence not just desirable but essential. Europe’s strength in civilian technology innovation represents an underexploited asset that could, with proper institutional frameworks, significantly close the defence technology gap. Those interested in how research findings are being reimagined through interactive analysis will find this R&D framework particularly instructive.

Nine Strategic Recommendations for Europe’s Defence Industrial Base

The Roland Berger study concludes with nine specific recommendations across three stakeholder groups, designed to address the systemic challenges identified throughout the analysis.

For European Policymakers and Military Agencies

1. EU as Defence Master Plan Architect: Guide doctrine convergence, structure flagship programmes such as integrated missile defence, establish industrial Centres of Excellence, and set EU-awarded programme criteria that reward specialisation and rationalisation over national duplication.

2. R&D Innovation Catalyst Agency: Boost early-stage defence R&D funding, create a European Defence Technology Roadmap, potentially expand EDA scope, and break the technology readiness level barriers that prevent research from reaching production.

3. Reinvent Defence Procurement for Speed: Adopt agile contract frameworks similar to US Indefinite Delivery/Indefinite Quantity (IDIQ) models, plan for wartime production continuity, pool procurement across member states, and create accelerated certification tracks for non-defence suppliers entering the market.

For Defence Industry Players

4. Fit Offerings for the New World: Invest in software-defined enhancements for existing platforms while developing smart, affordable mass solutions for next-generation requirements.

5. Build Flexible Industrial Models: Combine multiple ramp-up pathways, balance insourcing versus outsourcing, partner with civilian sectors, and embrace radical new production methods.

6. Adapt Operating Models for Agility: Create dedicated units for digital and smart mass solutions, streamline decision-making, and bridge cultural and talent gaps between traditional defence and technology-sector approaches.

For Non-Defence Industry Players

7. Explore Defence Opportunities: Map relevant defence initiatives, assess certification requirements, and develop clear value propositions aligned with actual capability needs.

8. Build Defence Market Strategy: Choose between short-term contract engagement for immediate revenue or deep ecosystem integration for long-term stability — avoiding diluted intermediate approaches.

9. Implement the Right Operating Model: Options include dedicated defence business units, spin-off subsidiaries, dual-use enterprise transitions, or “Europeanising” operations for UK-based firms seeking access to EU defence instruments.

As Global Managing Partner Stefan Schaible concludes: “Europe’s ability to deter and defend will depend not only on budgets or technology — but on how fast we align public strategy with private execution. Effective coordination must now become Europe’s core competitive advantage.”