What’s Driving the Debate: Aerospace and Defense in Europe / Insights on Germany

There is now broad recognition across much of the political spectrum that Germany must invest significantly more in defense capabilities. Political leaders have increasingly articulated the ambition for Germany to build the strongest conventional army in Europe, reflecting both the country's economic weight and its growing responsibility within NATO and the EU.

Spending is rising — Delivery takes time

Despite unprecedented political willingness to spend, converting budgets into military readiness remains a long-term challenge. Defense procurement cycles are inherently slow, particularly for complex systems involving technology, infrastructure and supply chains that often require years to scale.

They are also influenced by political ambitions and industrial interests that are not always easy to align.

German procurement authorities and ministries have become notably faster and more pragmatic than in the past. Industry participants increasingly acknowledge that approval processes and political decision-making have improved.

Yet even accelerated procedures cannot immediately overcome structural bottlenecks in manufacturing capacity, skilled labour shortages and fragmented European supply chains. Defense companies are therefore under pressure not only to secure contracts, but also to expand production and deliver at speed.

Strategic autonomy within NATO

Another key driver of the debate is the evolving geopolitical relationship with the United States. While Germany remains firmly committed to NATO and transatlantic cooperation, there is growing emphasis on strengthening European and German strategic autonomy. This includes greater focus on domestic and European industrial capabilities, sovereign technologies and national security screening of sensitive sectors.

The result is not a move away from alliances, but a stronger desire to reduce critical dependencies while remaining closely aligned with NATO partners.

A new and dual-use startup ecosystem

Germany is also witnessing the emergence of a more dynamic defense and dual-use technology ecosystem. Investors, founders and established industrial players are increasingly focusing on technologies such as AI, drones, cyber security, autonomous systems, space capabilities and resilient communications infrastructure.

This marks a cultural shift in a country where Defense-related business was long viewed cautiously by parts of the technology and investment community.  Startups are now benefiting from increased government attention, new procurement initiatives and growing demand from both military and civilian customers for resilience-focused technologies.

Defense beyond the military

Germany's understanding of defense is also broadening. Security policy increasingly encompasses resilience in energy systems, digital infrastructure, data security and critical supply chains. Defense is therefore no longer viewed solely through a military lens, but as part of a wider effort to strengthen the resilience of the state and the economy.

At the same time, the German government is increasingly focused on reforming procurement structures to accelerate delivery. Recent initiatives aim to make the Bundeswehr’s procurement system more agile and project-based, with closer links to industry and innovation ecosystems. While these changes reflect growing urgency, structural and legal constraints are likely to remain a limiting factor in the near term.

Authored by Falk Schöning.