INDUSTRY REPORT
“ Growing geopolitical tensions and conflict have spurred NATO to strengthen its defence industrial capacity, increase cooperation, enhance innovation and expand hundreds of new and existing production lines.”
INDUSTRY REPORT
SWORD AND SHIELD
We analyse trends, growth patterns and drivers in global defence markets for manufacturers.
EC 665 Tiger helicopter at Paris Air Show 2025.
As the world faces growing conflict in regions such as the Middle East and Ukraine, and a challenging overall security environment with increased geopolitical tensions, some NATO countries have stepped up their defence investment commitments and budgets accordingly. Speaking ahead of the NATO Summit Defence Industry Forum on 24 June 2025, NATO Secretary General Mark Rutte urged Allies to work with industry to expand their defence industrial base warning that“ there is not nearly enough supply to meet our increased demand on either side of the Atlantic.”
Global defence spending reached US $ 2.46 trillion in 2024, up from US $ 2.24 trillion in 2023. Analyst PwC confirmed recently that global defence budgets grew by 9 % in 2024, with the uptick in spending fuelled by“ government priorities in cyber, space and next-generation defence technology.” According to the IISS, European defence spending growth surged to 11.7 % in real terms in 2024. Governments are also reforming procurement processes to encourage innovation, reduce acquisition timelines and promote competition.
Novel production techniques and technologies are emerging, in combination with disruptive new entrants offering to reshape parts of the defence-industrial landscape. Defence start-ups are embracing new ways of manufacturing to reduce costs and act with increased agility( such as additive manufacturing). The potential exists for broad-based operationalisation of many technologies, from artificial intelligence and advanced air mobility( AAM) to unmanned systems. To combat vulnerabilities, the defence market has also moved to strengthen its supply chains and diversify suppliers in recent years.
NATO Summit Defence Industry Forum
At the NATO Summit Defence Industry Forum in The Hague on 24 June 2025, Allies signed several new multinational projects and expanded existing ones. Belgium; Canada; Denmark; Germany; Greece; Italy; the Netherlands; Norway; Poland; Sweden; Turkey and the United Kingdom committed to the joint acquisition, storage, transportation and
Image: © Rémy Michelin.
20 | ismr. net | ISMR July / August 2025