Article originally in the Financial Times.
For the first time in more than 30 years, the European defense sector is captured goods.
After decades of restricting European military budgets to remain funding for other obligations, it forced the hard approach of US President Donald Trump to Ukraine and his calls to the Allies to take more responsibility for their security, leaders of Europe. Governments promise to release hundreds of billions of euros to mobilize their industrial base and fill the gaps in their arsenals.
Values on historical maximums
Armory companies in the region benefited from higher spending after the Russian invasion of Ukraine three years ago, while the new government contracts increased the volume of unexpected orders to a record level. Trump’s return to the White House, however, started the efforts of Europe to re -arm and fired the prospects of this industry up.
Companies’ values have climbed to historical highs this week, and some of them have increased by more than 40 percent since the beginning of the year. “Geopolitical tensions, including the Russian invasion of Ukraine … It encourages a new global defensive supersklus,” said Loredana Muharremiová, analyst at Morningstar.
The potential termination of US military support for Europe raised questions about the shortcomings in its capacities and which companies could benefit from the urgent need to eliminate these shortcomings.
War in Ukraine revealed weaknesses in areas such as intelligence and monitoring, air and missile protection systems, heavy airliners and refueling air-air fuel. This week, the United States was hitting Ukraine by interrupting the exchange of news information with Kiev.
The biggest change since the Second World War
The estimates of the Stockholm International Institute for Peace Research show that the United States participated 55 percent in the importance of defensive equipment to Europe between 2019 and 2023. In the previous five years it was only 35 percent.
According to Guntram Wolff, head of Brussels Think-Tank Bruegel, the change of US policy towards Europe is “quite essential” and “the greatest since World War II”. “It’s comparable to the end of the Cold War,” he said, “but with a negative side, because Western Europe has been under the auspices of the last 80 years [a] also under the strategic leadership of the United States. ”
Industry leaders said they are ready to invest more, but stressed that they need governments to comply with their promises of long -term contracts.
Europe has “the necessary technologies for the production of the entire spectrum of defense facilities it needs”, said Patrice Caine, Executive Director of the French group Thales, which is engaged in defensive electronics this week. However, it was crucial whether the statements “support new contracts … If orders come, we will be ready”.
US defense companies could also benefit from increased expenditure of European governments unless countries intentionally exclude US equipment. Several European countries bought the most modern fighter aircraft in the world F-35, produced by Lockheed Martin.
Ground War and ammunition
European ammunition and armored vehicles are considerably busy, which could also be an opportunity for American manufacturers such as General Dynamics to continue to supply equipment.
However, it is expected that the direct European users of the benefits of any increase in expenditure will be a small group of top national defense companies such as the German Rheinmetall and British Bae Systems, which profit from orders for land vehicles, ammunition and ammunition. Another likely winner is the KNDS, the Alliance of the French company Nexter and the German company Krauss-Maffei Wegmann.
Rheinmetall, BAE, Nexter and Finnish-Norwegian government company NAMMO would benefit from larger investments in ammunition. Explosive and fuel suppliers, such as British Chemring and French Eurenco, will also be the winners.
Air defense and missile systems
More funds are also expected to be directed to air defense and missile systems. Ukraine has so far benefited from Patriot American production. It is the most advanced weapon of Washington’s air defense and is also used by several allies. It consists of a radar system and mobile launchers that can fire the missiles on incoming missiles or aircraft.
Analysts said Europe could instead send Kiev more of its Samp-T missiles. The system produced by Eurosam, the joint venture of the Pan -European missile leader MBDA and Thales, is also used by the Italian and French armed forces.
On Sunday, Thales has received a £ 1.6 billion pound contract from the British government to produce additional lightweight multi -purpose missiles used by Ukrainian forces. The Swedish company SAAB, which produces the Nlaw anti -tank shots, could also get other orders.
News and tracking
Another important area in which Europe needs to increase investment is news, tracking and research.
Director of the Military Air and Space Industry at the International Institute for Strategic Studies Douglas Barrie said that the war in Ukraine emphasized the importance of news, monitoring and survey and the decisive role of America in its security. Europe only counts on three types of signaling aircraft “Big Wing” including the Boeing RC-135 Rivet Joint, which uses the United Kingdom.
According to analysts, the Munich company Hensoldt, which is working on the Air Tracking System called Pegasus for the German Armed Forces, is one of the potential benefits. Swedish Saab also has capacity in the area of timely warning and control systems.
Space and satellite communication
Satellite communication and integration of the battlefield data are key areas in which Europe is relying on helping the United States. “Integration of digital technologies, data management, satellite news and then linking all this with units on Earth – this is a big gap that needs to be invest a lot,” Wolff said.
Eutelsat, French satellite operator and owner Oneweb, said this week that he is negotiating with European governments to provide additional satellite connection in Ukraine. The company has a good position if Starlink Elon Muska, which played a decisive role in helping Kiev to improve communication on the battlefield, withdrew its services. The price of Eutelsat shares increased by more than 500 percent since Friday’s shutter.
Artificial intelligence and autonomous systems
It is expected that European governments will allocate considerable amounts to new areas of growth, such as artificial intelligence, cyber security and autonomy, which should play a huge role in the military in the future.
Some existing players will benefit from this change. Thales is a cyber security leader, while the Italian company Leonardo has decades of experience in sensors and radars. Leonardo is also negotiating a manufacturing partnership with a Turkish manufacturer Baykar unmanned aircraft to increase European production capacities.
However, new market participants as well as the emerging Ukrainian drone industry will also be expected to benefit from this. Robert Stallard, analyst of Vertical Research Partners, said Europe has “the opportunity to do things differently … and involve more commercial technology companies in defense”.
“If you are going to increase defense spending by 50 percent, this is an opportunity for start -ups in the field of defense in Europe.”
The German defense startup AI Helsing, considered a European response to the American company Palantir Technologies Petra Thiel, which deals with data analytics, announced last year that he would move to the production of drones to take advantage of the growing demand for autonomous weapons. The company is committed to delivering six thousand its HX-2 offensive drones. Drones are powered by electricity and have a range of up to a hundred kilometers. Advanced artificial intelligence on board allows full resistance to electronic fighting.
Other reports were provided by Leila Abboudu in Paris and Ray Douglas in London.
© The Financial Times Limited 2025. All rights reserved. It must not be further spread, copied or modified. Ringier Slovakia Media is responsible for providing this translation. The Financial Times Limited is not responsible for the accuracy or quality of the translation.
