The global geopolitical context has changed fast, and as a result the EU is stepping up its defence, security and readiness capabilities.
Last week, the European Commission presented its White Paper for European Defence. This White Paper complements the ReArm Europe plan presented by the President of the European Commission earlier in March.
This renewed focus on EU defence is no surprise considering the recent geopolitical earthquakes. In the opening months of his presidency, Donald Trump has already called into question the US’ commitment to NATO and, with it, European defence.
As Commission President Ursula von der Leyen said, “the security architecture that [the EU] relied on can no longer be taken for granted”. In other words, Europe needs to be able to protect itself, and it needs to be able to protect Ukraine. But the Commission President will also know that encouraging EU member states – of which 23 are also NATO members – to spend more on defence could also help to appease the US President.
Preparing for the future of European defence
EU countries have – with some exceptions – massively underinvested in their military capabilities over the past years. Even those who have hit the NATO target (set in 2014) of spending 2% of GDP on defence have done so independently of one another, taking a go-it-alone approach that defies the usual EU logic.
The White Paper presents solutions to close critical capability gaps in the EU and to build a strong defence industrial base. It aims to deepen the EU defence market, and accelerate the transformation of defence through disruptive innovations such as AI and quantum technology. It seems to enhance European readiness for worst-case scenarios by improving military mobility, stockpiling and strengthening external borders.
Despite the EU’s standard commitment to multilateralism, there is a definite ‘EU-first’ feel to its plans.
Under the EU’s new financing instrument, the Security Action for Europe—which provides up to €150 billion in defence-related loans—entities must be established and headquartered in the EU, EEA/EFTA States, or Ukraine. There are also rules about how much of the final product (minimum 65% of the costs) must originate from the same countries.
This recognises the European defence industry not only as a strategic resource, but as a necessary part of European sovereignty.
Harnessing cutting-edge technologies
To strengthen the European defence industrial sector, the European Commission’s White Paper prioritizes investment in disruptive technologies such as AI, cloud computing, and quantum computing. Central to this strategy is the European Armament Technological Roadmap, which focuses on advancing dual-use technologies—those with both civilian and military applications.
This initiative aligns with the EU’s broader effort to drive technological innovation and preserve its global competitiveness. In addition to the White Paper on defence, the Commission is rolling out other strategies and policies aimed at unlocking the full potential of emerging technologies, particularly AI. A key example is the forthcoming “AI Continent Strategy”, which will aim to unlock AI opportunities across infrastructure, skills, applications, and data
Crucially, these policies should aim to reinforce each other. As highlighted in the White Paper, Europe must leverage cross-sectoral “spillover effects” to maximize the benefits of technological advancements across industries.
Given the increasingly hostile geopolitical environment, Europe can no longer depend on external actors for vital technologies. Building homegrown capabilities for cutting-edge technologies will be a key enabler to safeguarding both security and global competitiveness.
Shifting strategic priorities for a stronger and more autonomous Europe: what prospects for businesses?
The EU’s renewed focus on defence, competitiveness, and economic growth signals a broader shift toward strategic autonomy. With geopolitical uncertainty and a wavering US commitment to NATO, Europe is taking concrete steps to secure its own future—both militarily and economically. Strengthening the European defence industry is not just about security; it’s also about fostering innovation, creating jobs, and driving economic growth.
For businesses, this transformation presents new opportunities and challenges.
For EU companies, there will likely be an increased demand for defence products and services, as the EU prioritizes military readiness. This will create more procurement opportunities for defence contractors, cybersecurity firms, and infrastructure providers. Additionally, the EU’s focus on an integrated European defence market could open up market expansion opportunities, facilitating cross-border collaboration and allowing firms to scale operations beyond national borders. Companies driving innovation in emerging technologies—such as AI, quantum computing, and cloud security—will particularly benefit from these policies and the expanded EU-backed funding opportunities.
On the other hand, non-EU firms may face restricted market access, increased competition, and new regulatory hurdles. European companies will receive preferential treatment, creating greater competition for non-EU firms, which will need to find ways to remain competitive. Moreover, compliance with EU security and defence policies may present additional regulatory challenges, reshaping supply chains for foreign suppliers.
If you want to find out more about these developments and their impact on your organisation, get in touch with us directly.
