Europe’s defence and aerospace sector is entering one of the most dynamic phases in its modern history. After decades of underfunding and technological dependence, the continent is undergoing a strategic transformation marked by accelerated budget increases and rising private investment.

According to an analysis by Freedom24, the European investment platform connecting Romanian investors to international markets, this unprecedented expansion offers long-term investment opportunities in defence and related technologies. Research & Markets estimates that the European defence and aerospace market will reach $183 billion in 2025 and grow to $235 billion by 2030, an average annual growth rate of 5.1%.

At the same time, the combined military budgets of EU member states are expected to reach €381 billion in 2025, a 19% increase compared to the previous year. A key development is the launch of Bpifrance Défense, France’s first investment fund open to private investors in the defence sector. The fund will invest in approximately 500 companies – 70% French and 30% European – targeting an estimated annual return of 5%.

Investments in defence start-ups and deep tech companies have multiplied nearly fivefold in the past three years, highlighting Europe’s pursuit of technological independence. R&D spending is projected to exceed €17 billion in 2025, up from €13 billion in 2024. Around 80% of total defence investments are allocated to equipment such as air defence systems, satellites, drones, and cybersecurity tools.

“Europe is on the verge of a profound transformation of its defence architecture. For the first time in decades, this process is backed not only by political will but also by real investment. Growing budgets, the emergence of private funds and an influx of venture capital are making the defence sector one of the most dynamic areas on the continent,” said Radu-Iulian Pădurean, Network Development Manager at Freedom24.

Investment opportunities are diverse: major players such as Airbus, Thales, Dassault Aviation, and Leonardo continue to benefit from expanding contracts, while technological subcontractors in AI, satellite systems, robotics, and cybersecurity are becoming innovation drivers. In addition, specialized ETFs such as VanEck Defence UCITS ETF and iShares U.S. Aerospace & Defence ETF give retail investors the chance to access this growth without selecting individual stocks.

Freedom24’s analysis concludes that the defence industry has become one of Europe’s key engines of economic growth, and Romania is well-positioned to leverage this strategic trend through long-term, security-driven investment strategies.