Originally published at: Europe is taking back control – InvestEngine Insights
Europe is spending more on defence — here’s why it matters
Following recent global tensions and shifting alliances, European countries are spending more on defence than they have in decades. There is an increase in long-term government contracts and a push for self-sufficiency. This has made defence a key investment theme in today’s global climate.
But this isn’t just a military story. It’s an economic one too. For investors, it’s important to understand how these changes affect growth, innovation and markets and what that could mean for long-term opportunities.
European defence stocks have been climbing since 2022. Over the last year, European defence stocks have risen 40.8% compared to an 11.4% rise in European equities.
Defence budgets are rising and reshaping economies
NATO countries have committed to spending at least 2% of GDP on defence, with some now going beyond that. For example:
- Germany is modernising equipment, infrastructure and cybersecurity.
- France is expanding its military research and development efforts and its defence tech.
- Poland and the Baltics are speeding up purchases and alliances.
This shift of public spending has wide-reaching effects. Defence spending supports jobs, boosts demand in industries like aerospace, engineering and advanced tech. It can help stimulate growth in lower-performing regions.
It’s not just tanks. It’s tech, infrastructure and innovation
Modern defence spending now includes areas like cybersecurity, drones, AI and satellite systems, many of which overlap with civilian sectors.
That means companies in sectors like software, robotics and communications may benefit, even if they don’t directly supply defence. It also means governments are investing in infrastructure and innovation, which can lift the broader economy.
What this means for long-term investors
Rather than reacting to headlines, it’s more useful to consider the long-term implications:
- Diversification still matters: Investing globally and across sectors helps manage risk. Europe’s rising defence investment is one part of a wider trend.
- Economic stimulus in disguise?: In slower-growing regions, this spending may drive demand, jobs and tech innovation.
- Thematic opportunities: If you already invest in themes like aerospace or cybersecurity, you may already have some exposure to elements of this theme.
Europe is entering a new era of security and defence. As governments commit to long-term military expansion, you now have a unique opportunity to be part of this shift.
Why WisdomTree?
WisdomTree is a globally recognised ETF provider known for smart, research-led strategies. It focuses on factors like quality, dividends, and momentum to try to outperform traditional index investing.
With a strong presence across the US and Europe, WisdomTree’s thematic ETF range includes AI and European defence. The combination of innovation and low costs makes it an attractive Issuer to explore this unique theme.
Backtested Index Performance
Europe defence spending is rising fast. Capture this untapped growth opportunity now with the WisdomTree Europe Defence (WDEP) | InvestEngine.
For the full range of WisdomTree ETFs, visit WisdomTree | InvestEngine.
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