European defence industry is said to lag behind its American and Israeli counterparts

EU seeks to boost defence industry

The European defence industry, stricken by austerity measures of recent years, is set to receive a fresh boost from the European Union.

The European Commission is putting forward a proposal on Wednesday to foster innovation and growth by supporting small defence firms and encouraging synergies between military and civilian research.

The defence sector employs about 400,000 people throughout Europe and creates annual revenues of €90bn (£77.5bn). However, the European Commission fears the sector, dominated by giants such as the EADS, BAE Systems or Italian Finmeccanica, is not competitive enough.

The Commission also believes the fragmentation of the sector decreases efficiency and results in product duplication.

The goal of the current proposal is to set out standard certification procedures for the whole EU that would make it easier for producers to export their products throughout the EU. Currently, manufacturers have to undergo certification testing in every country to which they wish to export their products. Such testing is not only time-consuming, but also costly.

The Commission would also like to include technological spin-offs from the civilian research part of the defence industry into the EU's Horizon 2020 research programme, which has an €80bn (£69bn) budget for the period between 2014 and 2020.

"Horizon 2020 is exclusively civilian but of course since many programmes now are more and more both civilian and military we want to explore how we, in supporting civilian programmes, can use the results for the military side," an unnamed EU source said.

The Commission's paper is a contribution to a debate on how Europe can strengthen its defence industry and bolster a common defence policy that is set to culminate in a summit of European leaders in December.

The EU and its defence arm, the European Defence Agency, seek to encourage European countries to work together on defence projects to enable them to acquire advanced capabilities at a lower cost.

Many EU officials see the failed £29bn merger between EADS and BAE Systems last year, which collapsed in the face of political differences, as a missed opportunity to consolidate the European defence industry.

Europe is also lagging behind the USA and Israel in important defence areas such as the UAV development.

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