Insights into the practical, regulatory and financial dynamics shaping the European defence sector
At the Ashurst Defence Roundtable on 24 June 2025, representatives from industry, finance, start ups and advisory sectors engaged in a focused discussion on the operational and legal implications of the current security policy "Zeitenwende" (turning point). The exchange highlighted the urgent need for reform in a market shaped by technological innovation, geopolitical pressure and complex regulatory frameworks.
Key takeaways from the discussion:
- Procurement
Traditional procurement processes are seen as a barrier, particularly when it comes to technologies with short innovation cycles – such as drones, software and AI-enabled systems. While complex procedures may be appropriate for large-scale platform projects, they often lack the flexibility needed for fast-moving developments. Demand definition plays a pivotal role, and public authorities need to build the necessary structures, expertise and resources. More agile, internationally compatible procurement frameworks are essential.
- Market availability
The implementation of the turning point hinges on the actual availability of military goods within a tight timeframe. Building up production capacities and resilient supply chains requires long-term planning certainty. Diverging national requirements – often unnecessarily rigid – are a major obstacle to European coordination. Interoperable platform-based solutions and modular standards should take priority. The recently proposed Omnibus Package is a welcome first step, but its effectiveness remains to be seen.
- Risk allocation
An appropriate distribution of development risks remains challenging. Even for larger companies, passing procurement terms down the supply chain is often impractical. This limits the scalability of innovation and hampers collaborative models, especially in the context of long-term development cycles and high upfront investment.
- Financing
Access to financing remains limited for defence projects outside the scope of major, established players. Start-ups and SMEs frequently face structural hurdles, with traditional banks and insurers reluctant to engage despite the willingness of public development banks to provide support. Institutional investors – particularly in the large-cap segment – are showing increasing interest, but often encounter constraints due to project scale and regulatory complexity.
Ashurst advises clients across the full defence value chain – from strategic positioning and regulatory navigation to complex cross-border transactions. Ongoing interdisciplinary dialogue remains a cornerstone of our approach.
To explore current developments, legal implications and strategic opportunities in the defence sector, please reach out to our Defence team, Dr Martin Eimer, Dr Alexander Duisberg, Florian Hirschmann and Sascha Arnold.
