The Defense Technology Frontier: How Europe Could Lead (Boston Consulting Group)

Summary

• Many European countries aim to more than double their defense spending to 5% of GDP annually by 2035, with 3.5% as core defense spending.p.3
• The analysis covers roughly 250 million research publications and 90 million patent family records.p.3
• US venture capital investment in defense tech over 2015-2025 is about 8.5x Europe's, and the US has about 2x as many active startups.p.9
• Just one of the ten most vital defense companies in the world is European: the German company Hensoldt.p.9
• EU countries spend on average about 4% of their defense budgets on R&D, compared with 17% or so in the US.p.10

Key insights

1. Europe struggles to convert its research potential into deployable defense products, largely because of inconsistent domestic military demand.p.3
2. AI-powered applications are evolving especially quickly, while human augmentation systems are progressing more slowly than most others.p.4
3. Europe's share of high-quality patents is consistently lower than its share of leading scientific publications across all nine NATO emerging technology areas.p.7
4. There are about four times as many different major weapons systems in operation across Europe as in the US.p.10
5. The EU Defence Industry Reinforcement Through Common Procurement Act allocated €310 million in 2024 and 2025 to subsidize joint procurements.p.10
6. The European Defense Industrial Strategy sets a collaborative procurement target of 40% for defense equipment by 2030.p.10
7. Top ten European defense companies by revenue spend on average roughly 7.5% of revenue on R&D, compared with about 4.5% for US peers.p.10