Investing in defence as the world rearms

As countries in Europe and worldwide increase military spending amid mounting geopolitical tensions and risks, investors are taking a fresh look at defence companies

EU flag
(Image credit: NATO)

In a highly uncertain world, increased military spending, both in Europe and globally, is boosting the earnings of defence companies. And as this new “defence supercycle” continues to gather pace, many investors are seeking to increase their exposure to the defence sector.

It has been a remarkable 10 years. In 2014, when Russia illegally annexed Crimea, the reaction of NATO members in Europe was a commitment to move towards spending at least 2% of their GDP on defence. Progress was initially slow, with the majority of countries still a long way off the 2% spending goal when Russia launched its full-scale invasion of Ukraine in 2022.

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