Europe’s Big Re-Arming
Can the Defence Sector Revive and the Market Rally Last?
Europe aiming at military resurgence— bold plans to mobilise €800B in military spending
Substantial challenges ahead: years of underinvestment, supply chain issues, and innovation gaps persist
Defence stocks are soaring, with BAE Systems up 41% YTD and European defence stocks gaining over 60%
Europe Gears Up: Rebuilding Its Defence Industry (Because It Has To)
Over the weekend, the political soap opera in Washington hit a new peak, featuring Zelensky, Trump, and JD Vance in a heated Oval Office showdown. The latest drama confirmed what we already knew— Trump’s White House is stepping back from Ukraine, leaving Europe to handle its own security.
Europe has got the message. UK PM Keir Starmer pledged another £2B+ for Ukraine, and on Tuesday, Ursula von der Leyen unveiled “ReArm Europe”—an ambitious plan to pump nearly €800B into defence. The package includes:
€150B in loans to boost military investments
More fiscal flexibility, letting EU countries splurge on defence without breaking deficit rules
Pan-European upgrades—think missile defence, artillery systems, drones, and all the other essentials
If EU nations raise defence spending by just 1.5% of GDP, that could unlock €650B over the next four years—an urgent push, given that many countries still fall short of NATO’s 2% GDP defence target. Some countries are acting fast. Germany’s future coalition partners on Tuesday proposed to lift the 1% GDP cap on defence budget, and set up a €500 billion special fund to boost infrastructure and defence spending.