Europe’s Defense Awakening

How traditional industrial players can enter the booming defense market.

Europe is entering a historic phase of rearmament. Triggered by Russia’s invasion of Ukraine, rising cyber threats, and growing uncertainty about U.S. security guarantees, defense has become a top priority for policymakers. Germany alone plans to double its defense spending within five years, aiming to build the strongest conventional military in Europe. The country pledged to commit a staggering 5 percent of its GDP to defense by 2029, split in 3.5 percent direct military investment and an additional 1.5 percent for defense-related infrastructure. Such numbers were last seen in the 1960s and have not occurred since.

For industrial companies, this is more than a policy shift, it’s a market revolution. Given the growing demand of European armed forces across all military domains – land, air, sea, space and cyber – the continent’s defense sector is currently expanding beyond traditional arms manufacturers and tapping into industrial capabilities hitherto used for civilian purposes only. Especially in Germany, industrial players that face declining demand in their core markets now have an opportunity to pivot into defense and secure long-term growth.

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