Defence expenditure in Europe is entering a new phase.
The UK has announced an additional £15 billion for its Defence Investment Plan. The European Union has adopted a €1.5 billion programme focused on strengthening the defence industry, increasing production capacity and improving resilience.
These announcements are about national security. But they are also about capital formation. The investment implications are relevant across defence markets globally as governments seek to increase industrial capacity and resilience.
Defence budgets are no longer simply purchasing equipment. They are helping create factories, specialist machinery, intellectual property, qualified supply chains, regulatory capabilities and skilled workforces.
These are productive industrial assets. For investors, this creates an important shift. Defence expenditure is increasingly building long-term industrial capability rather than simply purchasing equipment, changing how defence expenditure should be assessed. A contract to purchase a finished platform creates revenue for the companies delivering it. Investment in an enabling technology or manufacturing constraint can create capability that serves multiple platforms, customers and markets.
The distinction matters.
Capital naturally gravitates towards visible programmes, large contractors and complete platforms. These opportunities are easier to recognise and often appear less risky because they sit within established procurement structures.
But the most important economic value may exist further down the supply chain.
A motor, power system, control layer, material or manufacturing process may be relevant to several uncrewed aerial, ground and maritime systems. A company resolving one of these shared constraints may gain exposure to multiple programmes without depending entirely on the success of a single platform.
That can create a stronger investment proposition than a headline programme alone.
It does not mean smaller companies are automatically better investments. Many will fail to move from prototype to production. Others will remain dependent on one customer, one founder or one technical advantage that cannot be manufactured economically.
The real opportunity is in companies that combine agility with industrial discipline.
Investors should be looking for businesses that understand where they sit in the system. They should be able to demonstrate that they resolve a real constraint, serve more than one programme and can translate technical performance into repeatable manufacturing.
They must also have credible supply chains, regulatory readiness and a clear path from development revenue to production revenue.
This is where the current allocation of capital deserves greater scrutiny.
The major primes will continue to play an essential role in defence. They have the programme relationships, balance sheets and integration capabilities needed to deliver complex systems.
But they cannot be the only recipients or gatekeepers of defence investment.
The structures that make a prime reliable at scale can also make it slower to pursue technologies that challenge established platforms or commercial models. Europe needs capital that reaches innovative companies while they are still able to move quickly—not only after their technology has been proven, consolidated or acquired.
As defence and autonomy markets mature, consolidation is likely to accelerate.
Some businesses will be absorbed into larger groups. Others will combine to create broader capability across control, power, propulsion, autonomy and manufacturing. The companies that survive should not merely own an interesting product. They should occupy a defensible position across several markets or solve a constraint that customers cannot easily avoid.
At ePropelled, our focus on power, propulsion and control technologies across the UxV market reflects this broader industrial trend. The enabling systems beneath autonomous platforms often determine scalability, efficiency and operational effectiveness, creating relevance across multiple customers, programmes and domains.
In this week’s Defence Lens, I look at why additional spending only creates security when it builds capacity at the points that actually constrain production.
Defence capital should not follow familiarity; it should follow the companies capable of turning investment into repeatable industrial capability.
Author Bio
Author: Henry Sullivan, Head of Finance, ePropelled
Oversees the company’s global finance, human resources and information technology functions. His role spans financial stewardship, operational governance and organisational strategy across ePropelled’s international footprint. With deep expertise in accounting and financial management, strong technology leadership and broad knowledge of international tax structures, Henry plays a central role in shaping the company’s long-term growth and efficiency. His strategic insight into emerging technologies, regulatory environments and supply chain dependencies provides a valuable perspective at the intersection of innovation, assurance and commercial execution.
Поділитися:
Making Connections: What Farnborough 2026 Told Us About the Future of Uncrewed Systems