German finance minister urges European defence mergers

German Finance Minister Olaf Scholz called on Wednesday for mergers within the European defense industry to get a better bang for the buck on procurement spending.

Scholz told a business conference outside Paris that governments were concentrating too much procurement spending on local companies and said weapons systems were too fragmented across Europe.

"We must support mergers not only under the leadership of our own national champions, so we will achieve a better-integrated defense policy that would provide internal security and turn the EU into a serious player within the global military architecture," Scholz said in a speech.

Despite long-standing calls for mergers, European governments and defense contractors have made little progress consolidating the industry.

French Finance Minister Bruno Le Maire, who was at the conference with Scholz, said this month that plans to combine the civilian shipyards of French state-owned shipbuilder Naval Group and Italian group Fincantieri should not include defense assets.

The multinational Airbus A400M military transport plane has also set an uninspiring example for cross-border defense cooperation as the programme has been plagued by cost overruns and delays.

Meanwhile, France and Germany are pushing ahead with plans to develop a next-generation combat aircraft to replace France's Dassault Aviation Rafales and Germany's Eurofighters, made by a European consortium.

The two countries also have plans to jointly develop a new battle tank due to being operational in 2035.

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