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- In today’s CEO Daily: Peter Vanham talks to Marco Buti, a former European Commission director general, about strategic autonomy from the U.S.
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- Analyst notes from Goldman Sachs on Germany, JPMorgan on the gender pay gap, and Wedbush on Nvidia, Musk, and Tesla.
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Good morning. Europe’s defense industry is about to get the boost of a lifetime. With its “ReArm Europe” plan, the European Union is planning to increase defense spending by $865 billion (€800 billion) over the next few years. Last week, the new German government in Berlin piled on, announcing it would lift its government spending limit to allow for $1.08 trillion (€1 trillion) in additional investments, part of which will also go to defense. If it materializes, the consequences for both European and American Fortune 500 defense companies will be huge.
The companies standing to gain the most? Fortune 500 Europe defense giants such as Airbus (No.41 in 2024), BAE Systems (No.140), Safran (No.152), Thales Group (No.194), Rolls Royce (No.205), Leonardo (No.246), and Rheinmetall (No.421)—as European leaders have expressed a clear intention to show a “European preference” in the new spending.
Europe is serious about increasing its “strategic autonomy” from the U.S., according to Marco Buti, a former director-general for economics and finance at the European Commission. “It’s about making sure we are in a reasonably good position compared to the [United States],” he said.
Building up a homegrown military-industrial sector also fits into a broader push from Europe to regain competitiveness and dynamism in its economy more broadly. For the past few decades, the bloc trailed both the U.S. and China in growth and innovation, and fell behind in everything from automotive to tech.
“We have a European growth model which is basically not sustainable,” Buti, who headed the European Commission’s powerful Economic and Financial Department from 2008 to 2019, told me. “It is a growth model that has at the center, Germany, clearly. It is very much export-oriented, and it’s caught in the ‘middle technology’ trap,” meaning it applies, but does not develop, the latest technologies (e.g. German cars running on Google software).
Whether the push will succeed remains to be seen. But a rally has already started among the European Fortune 500 defense stocks. Rheinmetall, for instance, saw a 15-fold increase in its stock price since the Russian invasion in Ukraine, including a doubling since the beginning of the year. It is now more valuable than Volkswagen.
And the ripple effect has started as well. A European tech and AI entrepreneur I met in London last week, who did not want his name used given his existing contractual obligations, told me he’d not seen as much excitement in the European investor and start-up environment since the 1990s.
“It’s the playbook of the U.S. and Israel, basically,” he said, pointing to the other countries where defense spending led to an ecosystem of successful tech companies. As for Europe, he said, “I’m already seeing investors shift to defense, given Europe’s increase in military spending. And if I can find an elegant way to get out of my current company, I’ll start a defense start-up myself.” — Peter Vanham
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Contact CEO Daily via Diane Brady at diane.brady@fortune.com
This story was originally featured on Fortune.com
https://fortune.com/img-assets/wp-content/uploads/2025/03/GettyImages-839329106.jpg?resize=1200,600 https://fortune.com/2025/03/24/marco-buti-europes-defense-spending-is-a-move-towards-strategic-autonomy-from-the-u-s/Peter Vanham
