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25 Sep 25. EIB Group approves €7.1bn in new financing for European tech leaders, energy security, defence and support for Ukraine
- EIF approved 21 operations strengthening Europe’s technological leadership, including first-of-its-kind fund supporting therapeutics for the central nervous system.
- New investments approved for Ukraine’s businesses and to support the country’s energy, transport and digital infrastructure.
The Boards of Directors of the European Investment Bank (EIB) and the European Investment Fund (EIF) held meetings this week and approved a total of €7.1bn in new financing to support the European Union’s (EU) technological leadership, boost investment in energy security and life sciences and back projects for climate adaptation and urban development in Italy, business support in Spain and sustainable transport in Greece. The Board of the EIF approved the launch the 3Seas Fund-of-Funds facility to support infrastructure development in Central and Eastern Europe. The EIF also endorsed investments aimed at reinforcing Europe’s technological leadership, with a focus on life sciences, digitalisation and defence capabilities. More specifically, a total of 21 operations contributing to the TechEU initiative were approved, including the first-of-its-kind life sciences fund dedicated to therapeutics and medical technology for the central nervous system.
“We are well on track to deliver record financing this year in support of European Union priorities from energy security to supporting Ukraine and strengthening Europe’s voice in a shifting geopolitical landscape,” said EIB Group President Nadia Calviño. “New investments approved under our flagship TechEU initiative will support homegrown innovations that will shape tomorrow’s economy.”
TechEU is the EU’s largest financing programme to date in support of innovation and tech leadership to attract talent, capital and investment in Europe. TechEU will provide €70bn in EIB Group equity, quasi-equity, loans and guarantees in 2025-2027 and crowd in private capital to generate at least €250bn in investments. In addition, the EIB Board approved two new investments in venture capital funds aimed at supporting emerging start-ups and local entrepreneurs in Ukraine, as well as energy, transport and digital infrastructure. The EIF also approved an operation to facilitate access to finance for small businesses in Ukraine. Since the start of the Russian invasion, the EIB Group has provided €4bn to Ukraine, repairing critical infrastructure, rebuilding schools, kindergartens, hospitals and securing the country’s energy supply. The EIB’s Board also approved new financing to support the deployment of public transport in Dar es Salaam, Tanzania, the largest city in East Africa.
Background information
The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. The EIB finances investments in eight core priorities that support EU policy objectives: climate action and the environment, digitalisation and technological innovation, security and defence, cohesion, agriculture and the bioeconomy, social infrastructure, a stronger Europe in a more peaceful and prosperous world and Europe’s capital markets union. The EIB Group, which also includes the European Investment Fund (EIF), signed nearly €89bn in new financing for over 900 high-impact projects in 2024, boosting Europe’s competitiveness and security. Approximately half of the EIB’s financing within the EU targets cohesion regions, where per-capita income is below the EU average, while almost 60% of annual EIB Group investments support climate action and environmental sustainability.
25 Sep 25. “Europe’s defence industry needs to access capital and financial services amidst growing security demands. Bureaucratic red tape, banks’ reputational concerns about funding defence, and the general characteristics of the defence market limit that access, not ESG.” This is the view expressed in Are ESG Standards the Scapegoat for Stalling Defence Growth? – a new RUSI research report by Linus Terhorst, which says the most acute financial problem facing Europe’s defence sector is the often-unexplained refusal of crucial business-securing products – and debanking – of small and medium-sized businesses. The research says many small and medium-sized enterprises (SMEs) in the defence sector − which play a vital role in delivering innovation, subcomponents, and services across supply chains − are currently facing a quiet financial crisis. But it makes clear that these challenges have nothing to do with ESG (Environmental, Social and Governance) regulations, since in both the UK and EU, these do not mandate the exclusion of defence businesses. Instead, it is lenders’ interpretation of compliance obligations and reputational risk management that often leads them to cut off smaller firms from the financial system. With some firms being debanked by major institutions, denied access to insurance, export guarantees and loans, they are often unable to grow, or even operate, due to their struggles complying with these rigorous financial compliance regimes. The report adds that the key restrictions to growth in the wider defence industry are structural issues – such as the long-term cyclicality of many defence products – which have curtailed its capacity to attract investment.
Key Findings
- SMEs in the defence sector are frequently denied financial services. The report says: “These issues…range from having bank accounts closed (‘debanking’) and limited access to insurance and lending to struggling with the underwriting of international exports.”
- Denial is unrelated to ESG regulation but stems from broader compliance pressures. “ESG regulatory standards and investment approaches are not a primary barrier to investment in the European and UK defence industry… Putting the blame on ‘ESG’ is often unsubstantiated, as financial regulators have not imposed such exclusions.”
- Large contractors can navigate complex banking standards – but SMEs struggle. “These standards can create a reporting burden for companies to prove that they have systems in place that mitigate the associated risks… Large defence companies (‘primes’) typically have the necessary expertise to comply.”
- Banks may be less inclined to help SMEs in navigating compliance. “SMEs generate lower revenues for banks and so can represent less of a priority for banks than primes… Banks are less inclined to provide professional resources to support SMEs throughout their due diligence processes.”
Key Recommendations
- Ensure clearer guidance on sustainable finance for defence: “Policymakers and regulators should continue to help promote greater clarity on how sustainable finance regulations apply in practice to investment or finance for defence companies.”
- Align guidance with the FCA’s position on defence: “Any new policy guidance for the financial sector should align with, or build on, the Financial Conduct Authority’s position on sustainability regulations and UK defence.”
- Banks should consider refining their messaging on defence investing: “Financial institutions offering ESG products and services should consider ways to improve their communication to clients and customers… on the potential opportunities that exist already to invest in defence within ESG investing approaches.”
- Compliance support for defence SMEs: “Policymakers should help defence SMEs comply with reporting standards (both financial and non-financial), including within the existing due diligence and procurement frameworks.”
- Financial institutions encouraged to ease SME reporting barriers: “Policymakers should continue to incentivise banks to consider ways to ease specific reporting barriers to promote access to capital for SMEs in the defence industry.”
The research follows a call by more than 100 Labour MPs and peers earlier this year, urging UK banks and investment firms to relax their rules on investing in defence companies. Alex Baker MP, who co-authored the initial letter by the Labour MPs, has welcomed the report’s findings, saying: “Financing is the lifeblood of our defence industry, and this report makes an important contribution by showing how we can get capital flowing to where it is needed most.
“The war in Ukraine has underlined the urgency of building greater capacity and resilience, and that depends on supporting the SMEs and supply chains at the heart of our industry.
“I welcome the report’s focus on tackling financial barriers, because without action our innovators and local employers will continue to face unnecessary hurdles. By recognising these challenges and setting out practical solutions, this report helps point the way to a stronger defence sector that can keep Britain safe and support prosperity in communities across the country.”
James Alexander, chief exec of the UK Sustainable Investment and Finance Association (UKSIF), whose members have over £19 trillion in assets under management, further welcomed the report’s core high-level findings on the relationship between ESG factors and defence, saying:
“Emerging defence firms are clearly experiencing financing issues, but this report draws a line under the notion that ESG standards are stopping capital from flowing into the industry.
“This analysis shows that structural issues, such as complex procurement processes and long development cycles, are the main barriers to business growth, while SMEs face challenges complying with important international banking standards.”
Conclusion
The report finds that the real barrier to the UK defence industry financing, and specifically SME’s, is not the ESG framework but wider factors such as an underexamined system of financial exclusions. Smaller firms – which are essential to Europe’s rearmament plans − face risks of being debanked and denied key services, not because of their products, but because they lack the compliance infrastructure and financial footprint of major contractors. The result is a systemic vulnerability in the foundation of the European defence sector. The report issues a clear warning: policymakers must shift the conversation from ESG scapegoating to practical reform. The path forward is not less regulation but smarter, fairer enforcement that ensures SMEs have the tools to comply, and that banks have a responsibility to support. By introducing clear guidelines, incentivising minimum standards of support from financial institutions, and offering practical government assistance, Europe can unlock the full potential of its defence SME base. Without intervention, calls to ramp up industrial defence production face financial barriers.
25 Sep 25. Bosnia and Herzegovina: Political impasse will persist, sustaining elevated policy risks. On 24 September, the parliament of Bosnia and Herzegovina’s majority ethnic-Serb Republika Srpska (RS) paved the way for the ruling Alliance of Independent Social Democrats (SNSD) to backtrack on previous threats that it would boycott the entity’s early presidential election, scheduled for 23 November. The election for a new RS president comes after a court verdict recently imposed a six-year political ban on (now former) RS president Milorad Dodik, revoking his mandate. However, Dodik continues to lead SNSD and has so far refused to step down, intensifying his secessionist rhetoric in recent months. We previously forecasted that Dodik and SNSD will likely backtrack on these threats. Nevertheless, Dodik will highly likely maintain control over SNSD and its future nominees. SNSD’s decision not to boycott the November election is a step towards the de-escalation of ongoing tensions. However, Bosnia and Herzegovina’s severe political impasse, reinforced by its complex power-sharing structure, will likely persist in the coming months, sustaining elevated policy risks. (Source: Sibylline)
23 Sep 25. European Council to negotiate with UK and Canada on SAFE defence loan. The talks will address terms for British and Canadian companies to participate in procurements funded by the EU’s SAFE initiative.. The European Council has approved the commencement of negotiations with the UK and Canada concerning their involvement in the €150bn ($176bn) Security Action for Europe (SAFE) defence loan instrument. This decision, made on 18 September 2025, authorises the European Commission (EC) to engage in discussions. These talks will focus on the conditions under which British and Canadian companies and products might partake in procurements supported by the SAFE funding initiative. Enacted by the council in May 2025, SAFE is a financial tool aimed at assisting EU member states in enhancing their defence capabilities through collective procurement. It is the first element of the EC’s ReArm Europe Plan/Readiness 2030 initiative. This strategy seeks to facilitate up to €800bn in total defence spending over five years. The loans provided under SAFE will be available to interested member states upon request and based on their national plans. These loans will feature competitive pricing and long maturities, requiring repayment by the beneficiary states. The SAFE framework also accommodates participation from third countries. This includes acceding countries, candidate countries, potential candidates, and nations that have entered into Security and Defence Partnerships with the EU, such as the UK and Canada. These countries are eligible to join common procurements. Additionally, Ukraine and European Economic Area-European Free Trade Association (EEA-EFTA) countries will receive treatment equivalent to EU member states, allowing them access to common procurements and equal terms for their industries. The upcoming negotiations with the UK and Canada will focus on establishing terms for extending access to their companies and products within this framework. The European Commission is tasked with conducting these negotiations on behalf of the EU, maintaining continuous coordination and dialogue with the council throughout the process. Upon conclusion of these negotiations, any resulting agreements will require consent from the European Parliament before coming into effect. In May 2025, the UK government stated that a new agreement with the EU “will pave the way” for Britain’s defence industry to participate in the SAFE defence fund. (Source: army-technology.com)
19 Sep 25. France seeks ‘mutually acceptable’ accord on next-gen fighter progress. France said it’s fully committed to reaching a “mutually acceptable solution” with Germany and Spain this year on the next phase of the Future Combat Air System, as prospects for the next-generation fighter project remain troubled amid infighting amongst the industrial partners. France, Germany, Spain and the companies involved are “fully mobilized” to prepare phase 2 of the program, which includes building a demonstrator of the combat aircraft at the heart of the system, the French Armed Forces Ministry said in an emailed statement on Saturday. France earlier this year asked Germany and Spain to redesign their FCAS cooperation to focus on “strengthening industrial leadership,” in order to meet a deadline for a future fighter to enter into service from 2040 onwards. Dassault Aviation, the French industrial partner for the fighter part of the program, has repeatedly said wrangling over work share with partner Airbus is causing delays.
“France and Germany remained determined to successfully carry out the FCAS program in cooperation with Spain,” the ministry said, adding it’s “fully committed, alongside its German and Spanish counterparts, to reaching a mutually acceptable solution by the end of the year.”
Dassault Aviation has reportedly been seeking a greater share on some parts of the program, with CEO Eric Trappier highlighting that the company, in combination with its French industrial partners Safran and Thales, has all the necessary skills to develop an aircraft on its own. Spanish Prime Minister Pedro Sánchez said the original work-share plans must be respected, at a press conference with German Chancellor Friedrich Merz on Thursday, according to media reports. Meanwhile, Merz said talks among the three partiers are ongoing, saying “we cannot continue as things are at present.”
The current difficulties on FCAS echo those around a joint European fighter program in the 1980s, where France opted to go it alone after disagreements on design authority and operational requirements. That split resulted in Dassault Aviation developing the Rafale, while partners Germany, the United Kingdom, Italy and Spain developed the Eurofighter Typhoon. Following completion of the first stage with the signing of contracts to develop key technologies, the FCAS team is “mobilized for a decision at the end of 2025,” the French armed forces ministry said. Germany’s defense ministry discussed FCAS with Airbus earlier this month, and told the company it was exploring potential closer cooperation with Sweden or the U.K., or going it alone with Spain, Politico reported on Thursday, citing two unidentified people familiar with the discussions. The U.K. is cooperating with Italy and Japan on the Global Combat Air Programme to develop a next-generation fighter, while Sweden is looking into its own future air-combat system. The various approaches, including programs in the United States, typically follow a system of systems approach: a crewed sixth-generation fighter at the core, teamed with unmanned wingman drones and remote carriers, using AI to reduce pilot workload and speed up decision making, all of it tied together through a combat cloud network.(Source: Sibylline)
19 Sep 25. Germany: Approval of 2025 budget underscores surge in defence expenditure. On 18 September, the Bundestag approved the federal budget for 2025. The late budget approval is due to the collapse of the previous government in November 2024 and the snap federal election in February. The budget provides for over EUR 500bn (USD 589bn) in spending and EUR 140bn (USD 165bn) in new debt, the second-highest amount in the history of the federal republic. While the largest proportion of spending is set aside for the Ministry of Social Affairs, EUR 86bn (USD 101bn) has been made available for defence spending, making German defence expenditure among the highest globally. Due to the budget’s late approval, it will only be valid for another three months (the government has so far operated under a provisional budget). The Bundestag is therefore set to consider the 2026 budget as early as next week. As the Union (CDU/CSU) and the Social Democratic Party (SPD) command a majority in the Bundestag, we assess that the 2026 budget will likely be passed without any major obstacles. (Source: Sibylline)
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Founded in 1987, Exensor Technology is a world leading supplier of Networked Unattended Ground Sensor (UGS) Systems providing tailored sensor solutions to customers all over the world. From our Headquarters in Lund Sweden, our centre of expertise in Network Communications at Communications Research Lab in Kalmar Sweden and our Production site outside of Basingstoke UK, we design, develop and produce latest state of the art rugged UGS solutions at the highest quality to meet the most stringent demands of our customers. Our systems are in operation and used in a wide number of Military as well as Homeland Security applications worldwide. The modular nature of the system ensures any external sensor can be integrated, providing the user with a fully meshed “silent” network capable of self-healing. Exensor Technology will continue to lead the field in UGS technology, provide our customers with excellent customer service and a bespoke package able to meet every need.
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