Nordic defence industry set for sustained growth

As most know, billions of euros and kroner flows into Nordic defence.

Nato’s recent agreement to allocate at least 3.5 percent of GDP to core defence requirements, alongside a further 1.5 percent for defence- and security related spending, is expected to expand the market significantly.

The sums involved are quite frankly substantial. 

According to calculations by the Confederation of Danish Industry, Nato allies would spend a combined €367bn if all member states met the 3.5 percent target in 2025.

In October, McKenzie etsimated that - on a balanced acceleration pathway - tempering the 3.5 percent target with national fiscal realities, European defence spending will rise from 470bn EUR in 2025 to approximately 800bn euro in 2030. 

Under a more aggressive pathway meeting 3.5 percent of GDP, defence spending could rise to more than 1000 bn EUR in 2030.

How this will unfold is uncertain since a number of countris experience fiscal constraints. As Paul Taylor, senior visiting fellow at the European Policy Center, notes in the Guardian.

- Several European states including the UK, France and Ital are in too fragile a fiscal position to finance a defence surge without massive joint borrowing.

62bn across the Nordics

Combined, Denmark, Norway, Sweden and Finland well underway and would "only" need increase annual defence spending by 11bn euro, the data from Danish Industry suggests.

At current output levels, a 3.5 percent target would equate to around 62bn euro a year in defence spending across the four economies.

The combined GDP is projected to reach 1,766bn euro in 2026, with annual growth estimated at 1.6–2 percent. Defence spending is therefore likely to rise in absolute terms year on year.

While many of the largest procurement programmes are expected to go to major European and US primes and will continue to do so, Nordic industry is already benefiting.

Recent financial preliminary results from Saab, Kongsberg and Patria underline the trend. Saab nearly doubled net sales to 79.1bn SKR (7.6bn euro). 

Kongsberg reported double-digit growth just before splitting into two major enteties,  while Patria in Finland surpassed 1bn euro in net sales. 

In Denmark, Terma (financial report, 2024/2025) achieved an order intake of 3.9bn DKK (522 mio euro), representing a 49 percent improvement compared to last year. Revenue reached 2.9 BDKK (388 mio euro), growing by 9 percent.

Detailed annual reports are still being digested, but the direction of travel is clear: the trajectory is expected to continue, with knock-on effects across the defence supply chain, from prime contractors to specialist subcontractors.

Start-up momentum

The sector is also seeing a explosion in start-ups.

Finland, with a population of 5,6 million, is home to 368 defence technology companies, according to research prepared for the state-owned investment company Tesi and cited by the BBC in April.

Around 40 percent of those firms are start-ups or scale-ups. Many report annual growth rates of 30-40 percent, particularly where they develop dual-use technologies with applications beyond defence.

At the recent DDAC conference, the mood was notably confident. With 1,000 participants and more than 100 exhibitors, the event is among the largest defence exhibitions in the Nordics.

Returning to defence reporting after several years away, I was struck by the depth of optimism across the industry. 

The shift from the more constrained procurement cycles of the past is pronounced. For Nordic defence companies, this represents an inflection point.