In an era defined by geopolitical instability, the European Union’s upcoming ReArm Europe Plan/Readiness 2030 and its accompanying White Paper for European Defence represent more than a policy shift, they are a call for businesses to align with a continent-wide mobilization. 

The plan highlights critical focus areas, including the support for Ukraine, closing defense capability gaps, and strengthening Europe’s defense industry—each creating vast opportunities for businesses across a range of sectors. With €650 billion mobilized through public and private investments and the introduction of the Security Action for Europe (SAFE) program, the landscape for defense innovation is shifting. Companies specializing in cutting-edge technologies like AI, cybersecurity, and advanced manufacturing can now pivot towards defense applications, capitalizing on the EU's commitment to long-term, large-scale procurement. Moreover, the proposed Defense Omnibus Regulation promises to streamline the regulatory environment, offering businesses a more predictable and stable platform for growth. This article explores how these developments create a fertile ground for companies in defense and dual-use sectors, providing them with access to new capital, flexible financing options, and unparalleled opportunities for collaboration.  

This article was written by Herman Annink ([email protected]), Marius Ungureanu ([email protected]) and Sefa Geçikli ([email protected]), Herman, Marius and Sefa are part of RSM Netherlands Business Consulting Services, specifically focusing on International Trade and Strategy.   
 
A Surge in Demand for Defense and Dual-Use Innovations 

The White Paper accompanying the ReArm Europe Plan highlights five core focus areas, each of which carries distinct business opportunities: 

  • Support for Ukraine – Firms involved in the production and supply of military equipment, logistics, and humanitarian aid can anticipate ongoing contracts and procurement deals.
  • Closing Europe’s Defence Capability Gaps – Manufacturers of advanced defence systems and their supply chains will benefit from long-term investment to address shortages and upgrade military assets.
  • Strengthening the European Defence Industry – EU-backed funding will support R&D and production expansions, fostering opportunities for both established players and new entrants.
  • Preparing for Military Contingencies – Companies engaged in war-gaming, risk assessment, and emergency preparedness consulting will find an increasing demand for their services.
  • Enhancing Security Through Partnerships – Defence firms that establish cross-border partnerships or integrate their supply chains within the EU’s strategic objectives will benefit from favourable regulatory frameworks and financing options. 

The ReArm Plan translates those focus areas into seven key defence capabilities: air and missile defense, artillery systems, drones, strategic enablers like space infrastructure, military mobility, and cutting-edge domains such as cyber, AI, and electronic warfare. Alongside the €650 billion mobilized through Member State and private investments mechanisms, these sectors are set to benefit from the Security Action for Europe (SAFE), a €150 billion loan program designed to accelerate collaborative procurement among EU states. 

For businesses, this translates to predictable, large-scale demand. Member States are incentivized to pool orders, creating economies of scale that stabilize supply chains and reduce production risks. Companies in civilian sectors, particularly those specializing in AI, cybersecurity, or advanced manufacturing can pivot toward defense by emphasizing dual-use applications. For example, a firm developing AI for logistics optimization might adapt its platform for military mobility planning. Meanwhile, the requirement that 65% of procured goods originate from EU, EEA, or Ukrainian suppliers ensures opportunities for local SMEs and industrial partners. 

The EU’s vision of a Single Market for Defence seeks to dismantle decades of fragmentation. By harmonizing procurement rules and prioritizing interoperability with NATO standards, the bloc aims to make cross-border collaboration as seamless as domestic transactions. This shift creates fertile ground for partnerships. A German drone manufacturer, for instance, could collaborate with a Romanian cybersecurity startup to develop anti-drone systems, jointly bidding for SAFE-backed contracts. Ukraine’s integration into EU procurement programs further expands possibilities; joint ventures with Ukrainian firms offer access to niche expertise in areas like electronic warfare, honed through invaluable real-world experience. 

An Up to the Task Defence Omnibus Regulation 

A crucial regulatory component of the Commission’s White Paper is the proposed Defence Omnibus Regulation (Proposal by June 2025). This legislative framework is designed to streamline and harmonize rules governing the European defence industry, reducing bureaucratic barriers and accelerating the development of critical capabilities. By standardizing procurement procedures and enhancing coordination among Member States, the regulation aims to foster a more integrated and efficient European defence market. The omnibus regulation will focus on the following areas:  

  • increasing the cross certification of defence products and facilitating mutual recognition of certification where appropriate;
  • enabling the rapid grant of construction and environmental permits for defence industrial projects as a matter of public interest priority;  
  • ensuring the timely and lawful availability and usability of all necessary materials and other inputs in the supply chain of the European defence technological and industrial base, in particular for essential uses for which adequate substitutes are not available;  
  • removing obstacles to the availability at relevant times and locations of military personnel - removing obstacles related to access to finance, including ESG investment;  
  • facilitating the exchange of confidential and sensitive information under conditions that ensure both simplicity and security of handling;  
  • the streamlining of EU defence industrial programmes to reduce the delivery time, simplify the management of EU-funded projects and simplify the treatment of Member States’ cofounding. 

For businesses, this means a more predictable and stable regulatory environment, making it easier to plan investments, expand operations across multiple jurisdictions, and secure cross-border contracts. The regulation also aims to simplify approval processes for dual-use technologies, which will enable faster innovation cycles and reduce time-to-market for defence-related products. By harmonizing rules across Member States and simplifying bureaucratic hurdles, the regulation aims to create a more efficient and competitive European defence market. 

Unlocking Capital and Flexibility for Companies

The EU's defense push comes with a fundamental rewiring of financial rules that creates unprecedented opportunities for businesses. Traditionally, defense spending has been constrained by strict fiscal rules and limited access to capital. The ReArm Europe Plan changes this calculus through three key mechanisms that collectively reshape the funding landscape. 

First, the National Escape Clause (NEC) represents an unprecedented shift in fiscal policy. For the first time, member states can temporarily exempt defense expenditures from EU budget deficit rules through 2028, effectively creating a €650 billion spending corridor. This isn't just about increasing budgets, it's about changing procurement timelines. Where defense contracts previously needed to fit within annual budget cycles, governments now have multi-year spending certainty. For defense contractors, this means larger, longer-term contracts with more stable revenue streams. 

Second, the Security Action for Europe (SAFE) instrument fundamentally alters the cost of capital for defense projects. By leveraging the EU's AAA credit rating, SAFE provides 45-year loans with 10-year grace periods at interest rates significantly below what most member states could achieve independently. This changes the return on investment calculus for major capability projects, what might have been marginal investments at national borrowing costs become viable at EU-subsidized rates. 

Third, the European Investment Bank (EIB) has revised its lending policy to explicitly include dual-use and defense projects. The EIB plans to expand its defence-related funding by increasing its annual investment to €2 billion. This will support projects in key areas such as drones, space, cybersecurity, quantum technologies, military infrastructure, and civil protection.

Additionally, the EIB intends to refine its eligibility criteria, ensuring that excluded activities are narrowly defined and aligned with the EU’s evolving policy priorities. Furthermore, it aims to overhaul its operational framework by replacing the ad-hoc Strategic European Security Initiative with a dedicated public policy goal focused on strengthening Europe’s peace and security. This shift will be backed by significant financial and capital commitments, marking a decisive step toward bolstering Europe’s defence capabilities. 

Lastly, the financial sector is increasingly interested in defence, yet the industry remains underfunded due to restrictive investment policies from both public and private financial institutions. Access to capital remains a significant challenge for 44% of defence SMEs—far more than their civilian counterparts. Compared to businesses in the US and UK, European defence firms face fewer funding opportunities, with US investors accounting for 60% of total investments in the sector. To address this gap, the Savings and Investment Union aims to direct more private capital toward EU priorities, including defence. To support this effort, the European Commission is introducing a Communication on a Savings and Investments Union. 

For businesses, these changes demand a new approach to financial planning: 

  • Multi-year SAFE-backed contracts may enable different capital expenditure strategies
  • The growing pool of defense-capable capital means new opportunities for pre-contract financing
  • While flexibility has increased, the Commission still requires competitive procurement processes 

Dual-Use Innovation: Bridging Civilian and Defense Markets 

The Commission’s White Paper for European Defence Readiness 2030 highlights the close relationship between defense and civilian innovation. Technologies developed for military use, such as secure communication systems or AI-driven threat detection, often spill over into commercial applications, creating new revenue streams. The European Defence Fund, which has allocated €8 billion for collaborative R&D (2021–2027), offers grants for projects that combine both domains.

A satellite startup, for example, could repurpose its technology for EU space defense initiatives while commercializing its platforms for climate monitoring. Similarly, a renewable energy firm might develop microgrid solutions for military bases, later adapting them for disaster response. Businesses should take a broader perspective in understanding their capabilities to identify dual-use potential, emphasizing agility and scalability in funding applications. 

Forward Thinking 

As we look ahead, the surge in demand for defense and dual-use innovations presents a wealth of opportunities for businesses across Europe. The ReArm Europe Plan, backed by significant financial investments and a comprehensive regulatory framework, is setting the stage for a long-term transformation in the defense sector. Companies operating in advanced technologies, such as AI, cybersecurity, and aerospace, stand to benefit from increased demand for both defense and dual-use applications. The EU’s move toward a more integrated defense market and the push for cross-border partnerships will create fertile ground for collaboration across industries, unlocking new avenues for innovation and growth. For businesses, this means not only tapping into new defense contracts but also adapting to a rapidly evolving regulatory and financial landscape that is more conducive to large-scale investments.

Beyond direct procurement opportunities, businesses should consider how the broader shift in EU policy will impact supply chain dynamics, workforce needs, and technological innovation. The increased focus on defence spending will require companies to adapt to evolving compliance requirements, including export controls, cybersecurity standards, and interoperability mandates for multinational defence projects. Furthermore, the initiative will create a ripple effect across adjacent industries.  Telecommunications providers, energy firms, and financial institutions will also see shifts in demand as governments prioritize security and resilience. Companies that can offer tailored solutions for secure communications, protected energy grids, and financial compliance in the defence sector will gain an advantage in this new economic landscape.
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