Industry research
Scope
Europe
Companies
87
Table of contents
Defence budgets of EU member states reached a total of ~€326bn in 2024 and are expected to increase to ~€426bn by 2027, with a ~9% CAGR over the period (European Parliament, May 2025)
The European aerospace and defence manufacturing output was estimated to grow from ~€367bn in 2025 to ~€441bn in 2029 (~4.6% CAGR 2025–2029; Statista, April 2025)
In response to the war in Ukraine and the pressure on NATO members from the US to boost defence spending, several European countries have pledged to spend ~5% of their GDP on defence. As such, the EU’s “ReArm Europe Plan” aims to mobilise ~€800bn by 2030, creating extra demand for European defence products (euronews, June 2025; ESD, June 2025; European Commission, March 2025)
The demand for larger and unified European defence manufacturing has led to new regulations encouraging private investments, joint procurement and faster approval processes. In turn, this will allow incumbents to increase the scale of operations with better efficiencies and higher margins (sipri, June 2025; Bloomberg, May 2025)
Surface vessel modernisation taking place globally provides demand for European shipbuilders. In addition, due to tensions in the South China Sea, countries increasingly place orders for advanced European vessels, while unmanned sea drones are gaining traction among governments to alleviate military personnel shortages (ESD, May 2024; Shephard, November 2024)
The dominant position of American contractors, which accounted for >60% of EU military spending in recent years. Reaping benefits from the vast, unfragmented domestic demand, US defence players established a long-term technological leadership in advanced weaponry (e.g. F-35) over their European counterparts (Reuters, May 2025; The Guardian, June 2025)
Preference for domestic defence companies for procurement leads to fragmentation across Europe and hinders companies from expanding internationally, limiting their ability to achieve greater scale and production efficiency (European Economic and Social Committee, February 2025)
European defence equipment manufacturers face a significant skill shortage, which results in increasing wages and limited growth prospects. An increase in defence budget from 2% to 3% of GDP would require ~760k new workers (Reuters, May 2025)
With the full report, you’ll gain access to:
Detailed assessments of the market outlook
Insights from c-suite industry executives
A clear overview of all active investors in the industry
An in-depth look into 87 private companies, incl. financials, ownership details and more.
A view on all 521 deals in the industry
ESG assessments with highlighted ESG outperformers
