EU defense chief fears high spending and low production could drive inflation

Prefer on Google by Chris Powers European Union flags seen waving in front of the EU Commission headquarters in Brussels, Belgium on Feb. 26, 2026 (Photo by Nicolas Economou/NurPhoto via Getty Images) With Europe spending over 200 billion euros on defense in 2026 alone, the EU's Defense Commissioner Andrius Kubilius is worried that this spending might raise the price of weapons, he told the Kyiv Independent on April 21. Along with the expected unblocking of a 90 billion euro loan for Ukraine, which includes a large defense component, the EU is also set to disburse 150 billion euros in defense loans to 19 EU countries via its SAFE program in 2026. Assistance for Ukraine is also a major use case for products bought with SAFE loans. "A lot of things are now really moving," Kubilius said of the high amounts of new defense spending, adding that this influx of cash creates new concerns. "We are more concerned that money is increasing more rapidly than production. It creates some kind of inflationary pressure," he explained. A big part of the European Commission's work on defense is coordinating across the continent to bolster defense production. Kubilius highlighted the ASAP initiative, which took EU artillery shell production from 300,000 to two million per year, as an example of that effort paying off. However, defense companies in Europe remain fragmented across national borders and are reluctant to increase production without multi-year contracts to guarantee a return on investment, an issue which the commissioner highlighted as holding back progress. There are further EU initiatives on the table to address these concerns — EU defense initiatives, such as the SAFE loans, are being drafted to mandate cross-border production. Additionally, the European Commission has proposed a fivefold increase for defense spending in the next seven-year budget, now being negotiated in Brussels. According to the defense commissioner, there is ongoing work to map supply chains, with a goal of identifying and resolving other choke points in defense production. But even with all those efforts, Russia continues to outproduce Europe, Kubilius said. Giving cruise missiles as an example, Kubilius said that Russia produced around 1,200 last year, "and perhaps all of them were used against Ukraine." By comparison, Europe produced only 300. However, Kubilius said the CEO of Fire Point told him that they intend to produce 700 Flamingo missiles this year. "So I am also asking our industry why we are not moving with such speed," he said.