• RSM experts explore economic impact of coordinated defence spending on manufacturing in Europe at Delphi Economic Forum.
• Incremental and targeted cooperation across continent identified as procurement roadmap across continent.
• Senior leaders from RSM Member Firms in Belgium, Canada, Germany, Greece, Italy, Romania, Turkey and the UK unpick crucial global, regional and national economic themes at the forum.

RSM leaders gathered at the annual Delphi Economic Forum to discuss the economic potential of raising defence spending on the European manufacturing industry. 

The global event brought together leaders from government, academia, and business to explore crucial geopolitical themes, climate risks, and technological transformation across the continent.

During a prominent panel discussion, RSM examined how coordinated European defence budgets could influence wider economic stability. 

The session focused on the challenges to national funding strategies, along with how to maximise the opportunity to bolster manufacturing and manage complex supply chain barriers. 

Emily Sawicz, Director and Industrials Senior Analyst at RSM UK, outlined the delicate balance between targeted fiscal cooperation and underlying market challenges.

"The ripple effect of an increase in defence spending has the potential to boost the wider manufacturing industry at a time of weak growth across Europe," said Sawicz. "But there are other factors that need to be considered given persistent structural issues are still at play. These include capacity constraints, skills shortages, innovation hurdles, and financing difficulties."

The discussion highlighted that while the development of dual-use technologies could spur non-defence growth and retain highly trained professionals within the region, securing the necessary capital remains a significant hurdle for emerging enterprises.

Addressing the financial landscape, Sawicz added, "Access to credit remains a massive blocker for European defence start-ups. The internal attitudes of banks, environmental, social, and governance concerns, and the high costs and risks associated with defence research and development are leading some lenders to restrict financing for conventional weapons and dual-use technology."

The panel discussion included former European Commissioner Danuta Hübner, former Hellenic Republic Deputy Minister Panos Tsakloglou, and Bruegel Senior Fellow Zsolt Darvas.

Sawicz emphasised that incremental, targeted cooperation between European nations is a realistic path toward achieving both procurement discipline and potential fiscal stability.

"The opportunity to accelerate industrial growth is there, but it will also take more than an increase in defence spending to unlock supply chain and capital constraints.

“A broader question for Governments to solve is how to fund increased defence spending, does this come from raising taxes, cuts to welfare spend cutting, or potentially another path. There are different needs for each state and this makes coordinated investment challenging. 

“The roadmap is likely to be one of incremental, targeted cooperation between European countries. This is a realistic path where procurement discipline could create fiscal stability, which is how the defence spending question could be moved forward," Sawicz concluded.

The economic potential of increased defence spending was explored by RSM leaders at this year’s Delphi Economic Forum.  

The annual forum brought together 1,200 leaders from government, academia and business representing 70 countries in Delphi to explore geopolitics, mounting climate risks and digital transformation impact on the economy and civil society.

Senior leaders from RSM Member Firms in Belgium, Canada, Germany, Greece, Italy, Romania, Turkey and the UK shaped discussions, panel events and interviews to unpick crucial global, regional and national economic themes at the forum.

Among the forum’s panel discussions, RSM supported a session on the potential economic impact on the European manufacturing industry of defence spending rising across the continent

The budgetary implications of increased defence spending

The impact of an increase in defence spending in Europe has the potential to boost the wider manufacturing industry at a time of weak economic growth across the continent. 

Emily Sawicz, Director and Industrials Senior Analyst at RSM UK, said, “The ripple effect of an increase in defence spending has the potential to boost the wider manufacturing industry at a time of weak growth across Europe. But there are other factors that need to be considered given persistent structural issues are still at play. 

“These include capacity constraints, skills shortages, innovation hurdles, and financing difficulties.

“Access to credit remains a massive blocker for European defence start-ups. The internal attitudes of banks, environmental, social, and governance concerns, and the high costs and risks associated with defence research and development are leading some lenders to restrict financing for conventional weapons and dual-use technology.

“The opportunity to accelerate industrial growth is there, but it will also take more than an increase in defence spending to unlock supply chain and capital constraints.”

Emily was joined in this panel discussion by the following panellists:

• Danuta Hübner - Member of the European Parliament, former. European Commissioner, Belgium
• Panos Tsakloglou - Deputy Minister of Labor and Social Insurance (2023-2025), Hellenic Republic
• Zsolt Darvas - Senior Fellow, Bruegel, Belgium