Reference News Network, September 3 report: According to the website of Germany's Handelsblatt on September 1, Europe's economy is facing a structural transformation: more than 30 years after the end of the Cold War, the military industry will once again become the core pillar of industrial production. The driving force is the annual defense spending of European countries, which is expected to almost double by 2030, reaching over 800 billion euros.
This is the result of an analysis by McKinsey & Company obtained by Handelsblatt, in which the share of new equipment procurement is very high.
According to the report, annual spending on new tanks, drones, and software will increase from 140 billion euros now to 335 billion euros by 2030. These figures reflect the plan of NATO countries to increase their defense spending to 3.5% of GDP by 2035.
According to the mid-term fiscal plan of German Finance Minister Lars Lindner, Germany, as the largest economy in Europe, should reach this goal by 2029. At that time, Germany's defense spending will reach 153 billion euros, with an additional 9 billion euros for supporting Ukraine.
Despite the huge gaps in the fiscal plans for the coming years, Lindner still insists on this goal. Germany thus becomes the driving force behind the expansion of military equipment in Europe. The industry has already expected to receive large orders. "I cannot reveal the expected order volume of the Federal Armed Forces, but I can guarantee that the figures mentioned so far are very conservative estimates," said Armin Pape, CEO of Rheinmetall. "The number of tanks and military vehicles Germany will purchase far exceeds our expectations."
To handle these orders, capacity must be expanded. According to McKinsey data, the growth rate of backlogged orders is almost twice as fast as the production speed.
According to Pape, the military industry is striving to increase capacity, but this cannot be achieved overnight. He said that Rheinmetall will continue to increase the capacity for ammunition and tanks until 2027. The artillery factory that opened on August 27 in Lüsen is just the beginning. New ammunition plants will also be built in Lithuania, Romania, and Bulgaria. By 2027, Rheinmetall hopes to produce about 1.5 million shells per year. Before the Russia-Ukraine conflict, its annual output was only 70,000 shells.
However, experts warn that this "turbo-charged" procurement is particularly expensive for taxpayers, due to continuously rising prices and inefficient structures caused by insufficient capacity. (Translated by Jiao Yu)
Original: https://www.toutiao.com/article/7545697695206228515/
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