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26 Mar 25. UK MoD told to spend 10% of equipment budget on “innovative” tech. One of the main defence takeaways from the Spring Statement was the announcement of a £400m defence innovation fund. The UK Ministry of Defence (MoD) has been directed to spend 10% of its equipment budget on “innovative technologies” moving forward, amid controversy as the UK Chancellor Rachel Reeves delivered a Spring Statement to Parliament on 26 March. It is unclear what the definition for innovative technologies allows for, although it is likely a call to promote the greater integration of small and medium enterprises in providing for military capability, an area where the MoD has historically been poor.
Speaking before a packed House of Commons on 26 March, Reeves detailed that £2.2bn ($2.8bn) would be added to the MoD’s budget in the 2025/26 financial year, though with the target of 2.5% of GDP spent on defence by April 2027 unchanged and no commitment to raise this further during this parliament, it appears to be more an exercise in front-loading funding.
Additionally, an apparently new £400m protected budget for defence innovation was also created, intended to bring emergent technologies into military servicer quickly by harnessing the speed of development in the UK’s small and medium enterprise sector.
However, little information was forthcoming from the UK government as to the kinds of capabilities that will be sought through this fund.
During the Statement, Reeves spoke of the “regeneration” of Portsmouth Naval Base, and contracts announced in the 24 hours preceding the Statement detailed a £1.6bn deal extension to Babcock, dubbed “investment” by the UK government, for British Army maintenance.
James Marques, defence analyst at GlobalData, said the £400m innovation commitment could not be considered “DARPA-level funding”, in reference to the US defence and technology agency.
“We have to wait and see what happens, but I feel like in the current circumstances it will be important to see whether these new programmes go towards quick and simple boosts to frontline equipment, like buying a batch of COTS drones, or are spent on more broader ‘long term’ projects like infrastructure, AI, computing, and manufacturing, that don’t have such a straightforward hard-power impact,” Marques added.
COTS refers to consumer-off-the-shelf technology, effectively commercial grade systems that can be utilised or adapted for military use, as seen in the battlefields of Ukraine.
The lack of specificity in investment into the digital domain was also raised by Matthew Hodgson, CEO at encrypted messaging platform Element, which is used by the Ukrainian, German, and Polish militaries.
“The Spring Statement falls short in one critical area: defence spending, particularly in data privacy and secure communications,” Hodgson said.
“The announced £2.2bn boost to defence spending is a step in the right direction, but it must be carefully allocated to modernise secure communications and strengthen the UK’s overall defence capabilities.
“A stronger focus on cyber defence and secure data management is not just a necessity, it is an urgent priority. If the UK is to remain a leader in global security and intelligence, the government must recognise that cybersecurity and secure communications is defence,” Hodgson stated.
It should be noted that a programme to replace the British Army’s Bowman communications system under the £3.2bn Project Morpheus is at a standstill after years of delays.
UK claims British Army support “investment”
Hours before the Spring Statement was made, the UK government published a press release trumpeting a £1.6bn “investment” that would support the maintenance of the British Army’s Challenger 2 tanks, 105mm artillery guns, Trojan armoured vehicles, and other platforms.
In reality, the contract is a continuation of a previous deal with Babcock that, were it to have slipped, would have been a disinvestment in necessary maintenance requirements.
The UK government said the move would “boost the readiness” of British Army combat vehicles and support 1,600 jobs across the defence supply chain.
In its own release, UK defence prime Babcock stated that the five-year extension would be worth around £1bn in revenue which would be taken into the company’s contract backlog, and around £600m delivered as agent, not recognised as revenue.
Delivering contract funding as agent refers to the practice of an entity or individual acting on behalf of the funder to manage funding for a specific project, rather than directly receiving and managing the finances themselves. (Source: army-technology.com)
26 Mar 25. Estonia’s concerns after UK cuts British troop numbers. Country’s former defence commander questions whether the UK is taking its Nato role ‘seriously.’ Britain has reduced its military footprint in Estonia by hundreds of troops and to fewer than ten tanks despite pledging to increase it to tackle the rising threat from Russia, The Times can disclose. The military’s financial problems are deemed by allies to be so severe that the UK is struggling to meet its commitments to Nato’s eastern flank, a former commander of the Estonian defence forces has claimed.
Riho Terras, now an MEP, told Times Radio that the UK appeared unable to put together a brigade-sized force, typically around 3,000 to 5,000 troops, for an exercise in the spring and it concerned him the UK and others were not “taking seriously our defence”.
“The UK has difficulties to put together one brigade to participate in operations. I see it in Estonia every day,” he said.
He said the UK was not expected to be able to send a brigade-sized force to Exercise Hedgehog, one of the biggest Nato exercises in the Baltics, in May this year.
Asked if this was worrying, he said: “Of course it concerns me that we are not taking seriously our defence.
“The UK is not coming with the full power to the exercises because they have problems with the financing,” he added. Terras was commander of the armed forces until 2018.
Separately, defence sources said that the UK has about 1,000 British troops in Estonia — a reduction of 650 troops since April 2022, when there were 1,650 personnel in Estonia.(Source: The Times)
27 Mar 25. Armenia and Azerbaijan peace agreement: UK statement to the OSCE. Deputy Ambassador Deirdre Brown congratulates Armenia and Azerbaijan on the conclusion of negotiations on a peace agreement and urges both sides to sign it as soon as possible.
Thank you, Mr Chair. And thank you also, Your Excellency, Deputy Foreign Minister, for your update this afternoon.
The United Kingdom warmly congratulates Armenia and Azerbaijan on the conclusion of their negotiations on a peace agreement. This is a historic moment, and we urge both sides to sign the agreement as soon as possible. Finalisation of this peace treaty is the best route to achieving lasting peace and to delivering security and stability in the South Caucasus as a whole. It will open the way to increased trade and prosperity, not only for Armenia and Azerbaijan, but their neighbours also.
We urge both sides to refrain from rhetoric that undermines the prospects for peace. A return to conflict would be a tragedy and set back progress on peace in the region by years.
The United Kingdom continues to support all efforts, alongside our international partners, to ensure a durable and lasting peace in the South Caucasus. Thank you, Mr Chair. (Source: https://www.gov.uk/)
27 Mar 25. Kosovo to boost defence spending by 60%, plans drone, ammunition production, PM says. Kosovo plans to boost its defence spending by 60% over the next four years and to focus on acquiring Black Hawk helicopters and building plants to produce ammunition and drones, Prime Minister Albin Kurti said on Wednesday. Kurti has repeatedly argued for increased defence spending to counter any potential threat from neighbouring Serbia, which still considers Kosovo part of its territory.
“In the next mandate, we will allocate 1bn euros ($1.08bn) for our army,” Kurti told a cabinet meeting, up from 626 m euros over the previous four years. Kurti’s party came first in a parliamentary election in February with 41% of the vote but he is still seeking coalition partners.
Since coming to power in 2021, Kurti has steadily increased the defence budget. Kosovo bought a batch of Turkish-made Bayraktar drones in 2023 and last year it purchased Javelin anti-tank missiles worth $75m. NATO still has a force of more than 4,000 peacekeepers deployed mainly in northern Kosovo, which has seen the worst ethnic tensions over the past two years since the country declared independence from Serbia in 2008. (Source: Reuters)
26 Mar 25. Britain must not be shut out of EU defence fund, says fighter jet maker. UK should be thought of ‘as part of Europe’ when it comes to Continent’s defence. Airbus, the company behind the Eurofighter Typhoon warplane, said there needs to be closer collaboration between the UK and British defence suppliers must not be blocked from bidding for contracts bankrolled by the European Union’s €150bn (£126bn) military fund, bosses at Airbus have warned.
Michael Schoellhorn, defence chief at the the aerospace giant, which is behind the Eurofighter Typhoon warplane, said the UK should be brought into the European fold as part of a push to establish military capabilities independent of the US.
He said: “I’m personally not opposed in principle. I think we need to think of the UK as part of Europe when it comes to European defence.
“But obviously there are some things that need to be brought together a little more closely that have drifted apart for some time.”
Mr Schoellhorn said that while it was reasonable to treat Britain differently to other non-EU countries, UK access to the Security Action for Europe (Safe) initiative would likely require a new security agreement to be put in place.
It comes after Brussels set out strict rules for the fund, which is intended to help support key military projects amid doubts about the future of the Western alliance and Donald Trump’s commitment to defending Europe.
Those rules include a “buy European” clause that means it can only be used to purchase weaponry from EU countries and Ukraine – freezing out UK suppliers such as BAE Systems and others from countries such as Turkey.
Under EU proposals, the fund will only consider buying British weapons if the Government signs a security pact with Brussels, something that Emmanuel Macron, the French president, has sought to tie to loosening post-Brexit restrictions on access to fishing grounds.
Guillaume Faury, the chief executive of Airbus, said the question of the UK bidding for contracts funded from the Safe fund came down to a “political decision”, and that British defence players were already integrated with their EU counterparts across a wide range of programmes.
He said: “We industrial companies are across borders. Airbus is German, French, Spanish and British. Eurofighter has BAE Systems as a partner and MBDA [the missile manufacturer] is a joint venture between BAE, Airbus and Leonardo.”
While BAE and Airbus collaborate widely, they are in opposing camps in developing a Eurofighter successor. The UK company is developing the Tempest model with Italy and Japan, while Airbus is pursuing a rival design with France’s Dassault.
Mr Faury said it is vital that European governments cooperate on defence purchases to establish a “real sovereign industrial and technical base where you can really control and be certain of what you need at a given point in time.”
He said: “If they want to have a defence system that is affordable it has to be at scale and it has to come with a coalition of countries that buy the same systems.”
He rejected the notion that European defence platforms are universally reliant on key US technologies and said that the region – and potentially even France alone – had the ability to build a warplane based only on a local supply chain.
However, Mr Faury added that Europe cannot substitute home-grown defence technology in every area and needs to decide which programmes it requires to be fully independent of the US so that it can “de-risk and be in control”.
He said: “As long as procuring from the US is not a risk, it’s OK. You have some very core critical systems, and for others you accept to share.”
Mr Schoellhorn said countries led by France and Germany are understood to be working on a slew of defence orders that could include more warplanes and tanks, as well as stockpiles of ammunition. The first new deals should emerge in the coming months, he said.
Other areas that need to be considered, he said, include alternatives to Elon Musk’s Starlink satellite constellation and imaging specialist Maxar, which ceased providing Ukraine with satellite scans.
A strategic airlift capability is also needed to quickly move troops, as well as attack and electronic warfare drones.
Mr Schoellhorn said that while he would not favour pulling the plug on existing orders for the Lockheed Martin F-35 stealth fighter, countries such as Germany should drop plans for follow-on deals, arguing that the Eurofighter could fulfil most of the required capabilities.
(Source: Daily Telegraph)
27 Mar 25. UK to become ‘defence industrial superpower’, finance minister says. Britain’s finance minister Rachel Reeves said she wanted the country to become a “defence industrial superpower” as she pumped an extra £2.2bn pounds ($2.8bn) into the sector in her budget update on Wednesday. Reflecting heightened geopolitical tension and U.S. President Donald Trump’s calls for Europe to do more to protect its own security, Reeves said she would focus on new technology and innovation to drive the country’s defence industry.
Under new plans, 10% of the government’s defence equipment budget would be spent on new technologies, she said, with a focus on drones and AI, while small companies would be given better access to defence contracts in a reform of what she called a “broken” procurement system.
The government is also setting aside £400m to be spent on UK defence innovation to bring new technology to the frontline more quickly, she said.
Reeves referenced defence throughout her speech, calling the extra cash for the sector vital in a “a more insecure world”, and adding that the investment would help the wider economy. (Source: Reuters)
27 Mar 25. Spain’s Sanchez vows to launch plan for defence boost by summer. Spain, which has NATO’s lowest defence spending as a share of its economy, will outline and start implementing a plan to boost the defence sector before the summer, Prime Minister Pedro Sanchez told lawmakers on Wednesday, without providing details.
“The objective of this plan is for Spain to contribute to and, at the same time, benefit from this technological and industrial stimulus to strengthen the European security and defence area, while remaining faithful to our principles,” he said in a speech.
Spain spent just 1.3% of gross domestic product on defence in 2024 but has committed to meeting NATO’s 2% target by 2029, and Sanchez says it will do so sooner than that. He is seeking to keep pace with European partners worried about Russia’s threat and U.S. unreliability under President Donald Trump. He has also argued that southern European countries have different challenges to those faced by eastern flank allies, and need to focus on border controls, fighting terrorism and cyber attacks, which he said should count as defence spending. (Source: Reuters)
25 Mar 25. European armed forces face a complex landscape of digital transformation, with varying degrees of success and significant challenges. The path forward requires a clear-eyed assessment of strategic priorities, resources and political will. While ambitious goals for digitalisation are commendable, tempering these to focus on measurable, achievable objectives may offer a more realistic path to success…shaping Europe’s military capabilities for decades to come.”
This is the view of a RUSI research report, European Digital Defence Priorities in an Uncertain World by Noah Sylvia, which finds that digital technology across European armed forces differs significantly in terms of infrastructure and software being deployed, as well as in methods of digitalisation, governance and bureaucratic processes. The research, which assesses the digital defence capabilities, priorities and the challenges facing five European states – the UK, France, Germany, Poland and Spain – says that countries often possess robust digital technologies but struggle scaling them, and that significant diversity in the infrastructure and software, methods of digitalisation, governance and bureaucratic and budgetary processes, has reduced interoperability between the NATO members to “a patchwork of integration platforms, APIs, and duct tape”.
The research identified progress and issues with issues with specific digital projects, including those aimed at enabling multi-domain operations (MDO) and software-defined defence (SDD).
The report says the countries studied have committed themselves to digital transformation of their armed forces and are preparing to invest large sums of money to stimulate their defence industries but found that bureaucratic inhibitors, differing concepts of digital sovereignty, growing frictions with key allies, domestic political conflicts, and workforce skill shortages – will continue to limit progress.
On a country basis the report finds:
* UK: “The UK possesses some advanced digital capabilities but struggles with integration and scalability. The Next Generation Communication Network aims to address connectivity issues. However, delays and unclear requirements have hindered progress. The UK’s hybrid cloud strategy and emphasis on ‘Secure by Design’ principles are steps forward, but challenges in digital skills, procurement processes and legacy system integration remain significant obstacles.”
* France: “France has had success in scaling its digital capabilities, driven by a strong emphasis on national sovereignty. The DESCARTES, SIA and ARTEMIS.IA programmes are enhancing connectivity and data integration, but challenges in procurement persist. France’s focus on achieving 70–80% capability rather than perfection has allowed for more efficient delivery of digital systems, but the focus on domestic solutions complicates interoperability with allies.”
* Germany: “Germany has mature enterprise-level digital capabilities but faces challenges in cohering operational and enterprise efforts. The Bundeswehr’s multicloud strategy and focus on AI technologies are promising, but bureaucratic hurdles, risk aversion and a lack of digital skills hinder progress. Emphasis on NATO interoperability is strong, but internal integration across the armed forces remains a challenge.”
* Poland: “Poland is digitalising its armed forces through platform-centric modernisation, with significant investments in C4ISR [Command, Control, Communications, Computers, Intelligence,?Surveillance and Reconnaissance] and air defence systems, alongside the F-35. However, the lack of an enterprise-level digitalisation strategy and digital skills within the armed forces are major constraints. Poland’s cybersecurity capabilities are robust, but the country remains heavily reliant on external technology, particularly from the US.”
* Spain: “Spain lags the other countries in terms of digital capabilities, with limited financial resources and a lack of strategic vision for digitalisation. The Integrated Defence Information Infrastructure is a step forward, but the armed forces struggle with data integration, cloud adoption and AI deployment. Spain’s low defence spending and fragmented industrial base further complicate efforts for digital transformation.”
The report’s trans-national findings include:
* Standards differ widely: “The state of digital technology across European defence ministries and armed forces differs dramatically. Such differences exist in terms of the actual infrastructure and software bought, developed and/or deployed and the methods of digitalisation; and governance and bureaucratic processes.”
* Interpretations of sovereignty vary: “Each country interprets its digital sovereignty differently, with France setting a high standard that may not be replicable elsewhere. A clear definition of digital sovereignty and a candid feasibility analysis are essential for practical implementation … the focus on domestic solutions complicates interoperability with allies.”
* Skills shortages: “Each country in this paper faces a pervasive lack of digital skills, which is a significant barrier to digitalisation. The pay gap between public and private sectors exacerbates recruitment and retention challenges, while military leaders often struggle to grasp the specific functions and limitations of digital technologies.”
* Interoperability is a major issue: “While each country emphasises NATO interoperability, the interpretation and implementation of standards vary. Bilateral and multilateral interoperability initiatives are beneficial, but NATO must clarify its role in standard-setting to ensure cohesive integration across the Alliance.”
* No easy fixes: “European armed forces face a complex landscape of digital transformation, with varying degrees of success and significant challenges. The path forward requires a clear-eyed assessment of strategic priorities, resources and political will.”
The report concludes that increasing dependence on non-sovereign technology providers could theoretically reduce costs and improve interoperability but would result in an unacceptable loss of strategic autonomy, intellectual property, system ownership and industrial base. Current processes will continue to deliver pockets of capabilities but issues with interoperability and scale will remain. It ultimately recommends tempering “idealised ambitions” and ensuring enhanced interoperability through improved NATO standardisation.
The report says: “Armed forces might achieve more success if they set modest, measurable objectives for their various digitalisation efforts. Ambitions for idealised notions of sovereignty, perfect connectivity, integration or interoperability and world-class capabilities may have to be tempered, with ‘full digitalisation’ (whatever that means) replaced by quantifiable levels of digital capabilities to be achieved by set dates. Such an approach could include European collaboration on capability development and procurement, but this alone would not close the gap between ambition and reality.” (Source: RUSI)
21 Mar 25. EIB steps up financing for European security and defence and critical raw materials.
* EIB Group further expands eligibilities for security and defence investments
* EIB to double investment into Critical Raw Materials, under new initiative
The European Investment Bank (EIB) today agreed a series of measures to further boost investment in security and defence and critical raw materials.
The EIB’s Board of Directors also approved a total of €8.9 bn of new financing for port and rail projects, education, energy and grid upgrades, water and business investment.
“The message of European leaders is clear: we must strengthen Europe’s security and defence capabilities. Today’s decisions show that the EIB is part of the solution.” said EIB Group President Nadia Calviño.
Strengthening European security and defence
The Board further expanded EIB Group eligibilities for financing Europe’s security and defence industry and infrastructure, to ensure that excluded activities are as limited as possible in scope, in line with the proposals endorsed by EU leaders at the Special European Council on 6 March.
The EIB’s existing €8 bn Strategic European Security Initiative (SESI) will be integrated into a cross-cutting and permanent public policy goal, which will complement the existing public policy goals. There will be no predefined ceiling for financing in this area, which will be determined annually in the EIB Group Operational Plan.
This will enable the EIB Group to respond to financing needs in a manner which safeguards its operations and a strong financial position for security and defence projects and investments in areas such as barracks and storage facilities, land and aerial vehicles, drones and helicopters, radars and satellites, advanced avionics, propulsion and optics, land border protection, military mobility, critical infrastructures, de-mining and de-contamination, space, cybersecurity, anti-jamming technologies, military equipment, seabed infrastructure protection and research.
The decisions will further facilitate investment to bolster Europe’s industrial defence capacities, complementing the European Commission’s White Paper for European Defence and “Readiness 2030” plan, while fostering synergies with EU governments, national promotional banks, the private sector, and other key stakeholders. The EIB Group is expected to at least double its investments for security and defence projects this year to a new record.
Critical raw materials strategic initiative
The EIB Board also adopted a new critical raw materials (CRM) strategic initiative that will enhance the EIB Group’s role as key provider of financing and advisory support to projects across the entire value chain in and outside EU, contributing to the objectives of the EU’s Critical Raw Material Act.
Secure access to critical raw materials is crucial for Europe’s green and digital transitions and essential to ensure the global competitiveness of European industry, including in the area of security and defence and aerospace.
The new initiative includes an expected €2 bn financing for critical raw material investment this year, a new CRM Task Force and a dedicated one-stop shop to build and manage a pipeline of CRM operations and advisory activities and increased technical expertise and partnerships.
€8.9 bn of financing for transport, education, energy, water and business
The EIB also approved new financing for projects totalling €8.9 bn. This includes large scale rail investment in Czechia, Germany, Spain and Costa Rica, support for a port in Estonia, upgrading schools in France and Portugal, water schemes in Kenya and Latvia, energy projects in Andorra, Germany and Spain.
New EIB financing for business investment will improve access to finance by pharmacies in Spain, and companies owned by women and young entrepreneurs in Africa, and firms in Greece, Italy, Portugal, Spain and Bangladesh.
Background information
The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. Built around eight core priorities, we finance investments that contribute to EU policy objectives by bolstering climate action and the environment, digitalisation and technological innovation, security and defence, cohesion, agriculture and bioeconomy, social infrastructure, the capital markets union, and a stronger Europe in a more peaceful and prosperous world.
The EIB Group, which also includes the European Investment Fund (EIF), signed nearly €89 bn in new financing for over 900 high-impact projects in 2024, boosting Europe’s competitiveness and security.
All projects financed by the EIB Group are in line with the Paris Climate Agreement, as pledged in our Climate Bank Roadmap. Almost 60% of the EIB Group’s annual financing supports projects directly contributing to climate change mitigation, adaptation, and a healthier environment.
Fostering market integration and mobilising investment, the Group supported a record of over €100 bn in new investment for Europe’s energy security in 2024 and mobilised €110 bn in growth capital for startups, scale-ups and European pioneers.Approximately half of the EIB’s financing within the European Union is directed towards cohesion regions, where per capita income is lower than the EU average.
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