Playing defense

Europe needs to spend more on defence, and the political will is now clearly translating into actual numbers. The European Commission’s €800 billion “Readiness 2030’’ programme even allows temporary exceptions from fiscal rules — a major shift in mindset. In addition, Europe announced €150 billion in EU defence loans (“SAFE”). Germany suspended its constitutional “debt brake” to enable additional defence spending.

In June, NATO members agreed on a new target: defence and defence-related spending of 5% of GDP by 2035 — a remarkable increase from the long-standing 2% target, which many countries had failed to reach for years.

At ECP, we therefore believe that defence will unfortunately remain an investment theme going forward.