European Commission to lay out industry strategy for 'war economy'

The European Commission wants to create a defence industry system in the European Union fit for war with a new long-term strategy on Tuesday.

The Ukraine war was a "wake up call," EU Internal Market Commissioner Thierry Breton told French media, France info on Monday, stressing that EU countries need to combine their defence production resources.

"We have to move our defence industry into war economy mode, so that we can supply Ukraine with what it needs, but also ourselves, for our own security," he said.

As well as develop the EU's native industry, the wider strategy aims to shift defence production away from a peace-time basis to meet the new demands of increased European investment.

To achieve this, the commission is to propose a European Defence Industry Programme.

Among other things, the programme is to use the EU budget to support the joint procurement of all types of military equipment, an EU official said.

The programme expands a short-term scheme created last year to help the bloc's defence industry supply Ukraine with 1 million artillery shells, the EU official said.

The idea is to provide the security of supply for defence companies to set up new manufacturing lines without waiting for new contracts to start production.

Other measures to support the long-term ramp up of defence production include introducing a weapons reserve system, similar to the United States, to make the sale and distribution of weapons faster.

Exemptions from Value Added Tax (VAT), as well as the commission negotiating weapons contracts on behalf of groups of EU countries, are also included in the programme.

The commission also wants the European Investment Bank (EIB) to adapt its usually strict rules and invest in weapons' production.