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The arms boom is bringing German gunsmiths high sales profits. The necessary European cooperation is still falling by the wayside.
Investment spending on defense in Germany will rise to over 108 billion euros in 2026. The German defense industry benefits from this, as its share has so far been over 90 percent of German defense spending.
He is at the forefront Tank and ammunition manufacturer Rheinmetallwhich was able to increase its sales from 7.2 billion euros (2023) to almost 11 billion euros (2025). To the US industry leader Lockheed Martin However, with sales of 68 billion euros in 2024, the gap is huge.
This is how Germany’s arms industry is growing
The British BAE Systems also has sales almost three times as high as Rheinmetall. On the armaments division of the Franco-German-Spanish Airbus SE (12.2 billion euros), however, Rheinmetall has caught up.
The next largest German defense companies are Thyssenkrupp Marine Systems (submarines, 2.2 billion euros), Hensoldt (optical equipment, 2.2 billion euros), KNDS (tanks, half owned by the German Wegmann Group, 3.8 billion euros) and Diehl Defense (air defense systems, 1.8 billion euros). They were all able to increase their sales, Diehl Defense even by 60 percent from 2023 to 2024, and growth is also expected for the coming years.
Prof. Dr. Christoph Scherrereconomist and political scientist, researches international political economy and sustainable control of global markets. He was a professor in Kassel and is a member of the Kassel Institute for Sustainability. He is part of us EXPERTS Circle. The content represents his personal opinion based on his individual expertise.
In addition to growth, new weapons technology also entails risks
The rapid growth entails certain risks for the future utility value and price of the weapon systems. The contracted companies show a path dependence of Cold War-era specialization, but it is uncertain which weapons will promise success in new wars.
This is difficult for clients to check, which is why there is a risk of deadweight effects. The government is responding to this problem by supporting research and development and startups that promise faster and more innovative AI and robotics capabilities than established defense companies.
The horrific Russian attack on Ukraine provides quick feedback as to whether the new weapons technology delivers what it promises – as the Munich company recently did Helsing had to find out about his drones.
European instead of national procurement
There is a consensus among military experts that the current national procurement system has led to inefficient duplication of structures, high unit costs and a lack of interoperability between European armed forces.
For example, four different models of battle tanks are manufactured in the EU. The European Union has therefore taken appropriate measures: The EDIP (European Defense Industry Program) is intended to support the joint procurement of defense equipment.
The “Readiness Roadmap 2030” sets the goal of increasing the share of joint procurement of defense equipment from the current level of around 20 percent to at least 40 percent by 2027. The resources available for this have so far been modest.
1.5 billion euros were available for the EDIP and one billion euros in growth capital. However, with the “Security Action for Europe” (SAFE) passed in 2025, loans worth up to 150 billion euros are now available for joint procurement by at least two countries. However, SAFE also allows temporary procurement by individual member states.
States are fighting for contracts from their companies
The security policy benefits of rearmament are uncertain. Did the weapons procured serve as a successful deterrent? And even in the event of war: were they the right ones? The economic benefit is immediately recognizable for the defense companies, their employees and the production sites.
Accordingly, European countries are fighting hard to determine whose company will win the contract for production. The long-planned project of a European fighter jet complete with accompanying drones and new types of communication systems (Future Combat Air System, FCAS) is in danger of failing due to the German-French dispute over the management of the project.
Trump’s nationalist interference and Merz’s “strongest army”
The Trump’s politicswhich on the one hand motivates Europe to act together, on the other hand contributes through its tariffs on European goods and the demand Restrict trade with Chinacontributing to the exacerbation of Europe’s current economic difficulties.
This intensifies the competition between locations when awarding contracts. Trump also supports a nationalist ideology that is not only showing its ugly face in Hungary.
Germany in particular, given its aggressive history and as the economically strongest country in Europe, should therefore make its contribution to strengthening Europe. The Government statement from Chancellor MerzCreating Europe’s “conventionally strongest army” is therefore of little benefit.
Disadvantages of a too strong German military
In the most important US magazine for international relations, Foreign Affairs, Liana Fix already warns against an overly strong German military. This could lead to backlash among Germany’s neighbors, so that instead of a united, strong Europe, a divided one could emerge.
To protect against national solo efforts, she recommends that Europe take on joint debt for the necessary rearmament. Merz seems to continue to reject community debts. This means that a strong Europe as a counterweight to the USA and the People’s Republic of China will not be achieved.
