The growth of European military budgets has shifted priorities toward foreign military companies instead of supporting domestic defense industries despite EU funding programs.

New waves of European defense funding triggers local defense technology sector neglect because foreign companies benefit from winning progressively more major defense contracts. Analysts warn about a decrease in European strategic autonomy because EDIP received only a €1.5 billion European Defense Industry Program boost in non-EU supplier reliance.

The 16% growth in European military budgets recorded in 2024 by SIPRI represents the largest such increase since Cold War times while EU industries remain behind in fields of advanced defense technology including air defense systems and drones. Most critics object to the European Parliament's requirement that projects funded by EU institutions need at least 60% European Union material while pointing out ineffective enforcement.

The defense centers of France and Germany doubt that EDIP funds will benefit U.S. and Israeli companies above all others since these countries lead the market in missile defense technology and tactical drone production. The foreign weapon deals that France signed in 2024 reached nearly €7 billion worth surpassing their domestic weapons orders. Germany decided to buy faster delivery air defense systems from outside suppliers.

According to Bruegel there will be a sustained preference for foreign defense technology among smaller states and Eastern European countries unless EU sourcing rules are strengthened. France together with Germany experience major advantages from the defense market but their defense industry capabilities outpace those of Poland and Baltics who need to maintain imports.

The escalating conflicts in Ukraine and the Middle East push defense technology firms from the United States, Israel and South Korea toward a position where they will lead the European defense market.