European naval shipbuilding sector remains fragmented along national lines, despite efforts at greater defence-industrial integration, according to The Military Balance 2026 published by the International Institute for Strategic Studies.
The report notes that many countries continue to rely on national champions, often state-owned or majority state-owned, in order to preserve a degree of strategic autonomy. Medium-sized yards typically support warship programmes by constructing blocks or producing smaller vessels.
While the European Union has promoted closer defence-industrial cooperation, national procurement strategies and domestic political priorities continue to limit consolidation across the sector. The IISS highlights two additional trends shaping the landscape: a growing separation between hull construction and system outfitting, and a gradual revitalisation of military shipbuilding since 2022, reflected in a modest increase in the number of yards involved in defence work.
High-end warship construction remains concentrated among a small number of prime contractors. Germany, Turkiye and the United Kingdom are singled out as notable exceptions within Europe, in that each has multiple principal shipbuilding companies with comparatively limited state affiliation.
Over the 12 months to November 2025, European shipyards completed three submarines, seven frigates, one landing helicopter dock and three replenishment ships. However, the IISS cautions that only a small proportion of this output can be directly attributed to the surge in defence procurement following Russia’s invasion of Ukraine in 2022, given the long lead times inherent in naval construction.
Many projects funded since then are not expected to deliver completed vessels until later this decade; production levels at European shipyards are likely to rise in the coming years.
3 submarines and 7 frigates compares reasonably well with the US and decently with China in terms of numbers, but in terms of capability we’re there’s definitely a gap.
The USN is still cranking out a pair of Burkes and 1-2 Virginias a year, while the PLN’s current Type 052D frigates have twice the armament of your average European frigate (and are larger and more heavily armed than a Daring).