Germany plans to play central role in rearming Europe

With US military support now more uncertain, Germany one of the biggest backers of Ukraine plans to nearly triple its regular defence budget to around 162 billion euros per year by 2029

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For Gundbert Scherf — the co-founder of Germany’s Helsing, Europe’s most valuable defence startup — Russia's invasion of Ukraine changed everything. Scherf had to fight hard to attract investment after starting his company — which produces military strike drones and battlefield Al — four years ago. Now, that’s the least of his problems. The Munich-based company more than doubled its valuation to $12 billion at a fundraising last month.

“Europe this year, for the first time in decades, is spending more on defense technology acquisition than the US,” said Scherf. The former partner at McKinsey & Company says Europe may be on the cusp of a transformation in defence innovation akin to the Manhattan Project — the scientific push that saw the US rapidly develop nuclear weapons during World War Two. “Europe is now coming to terms with defence.” Reuters spoke to two dozens executives, investors and policymakers to examine how Germany — Europe’s largest economy — aims to play a central role in the rearming the continent. Chancellor Friedrich Merz's government views Al and startup technology as key to its defence plans and is slashing bureaucracy to connect startups directly to the upper echelons of its military, the sources told Reuters.