Post-NATO summit briefing: where funding is going
Earlier this week, NATO formally raised its defence spending target to 5% of GDP by 2035. This represents a combined commitment of 3.5% for core defence expenditure and 1.5% for enabling infrastructure, cyber-defence, and industrial resilience. The 2025 Summit outcomes create actionable openings for firms aligned with NATO, UK, and EU procurement priorities. Our key takeaways are below.
Key takeaways:
NATO will favour firms that can move earlier and faster, scale delivery, and get the politics and policy right. Political dynamics during the second Trump era will introduce much higher levels of friction and ambiguity than normal as politics will more heavily determine procurement outcomes. Nevertheless, the direction of travel is clear: more money, faster timelines, new pathways for new entrants, and greater reliance on trusted suppliers.
Actionable insight: As defence budgets grow, competition will become sharper—making institutional access, political positioning, and strategic credibility more decisive than technical merit alone. Policymakers will back only a limited number of firms that align with national priorities and understand how to navigate the system. The advantage will go to those who move early and credibly.
NATO will fast-track tech adoption and pre-commercial procurement. NATO endorsed a new Rapid Adoption Action Plan to fast-track funding into emerging technologies. Key mechanisms include shortening of procurement time horizons, coordinated testing, sandboxes, and cross-border procurement of battle-ready systems. The emphasis is on speed and interoperability, with a clear commercial pull for firms operating in AI, autonomy, and ISR.
Actionable insight: Engage with the live DIANA Challenge Call, which provides funded procurement access across 32 Allied markets. Firms with exportable dual-use capabilities are best positioned to benefit.
Air and missile defence and autonomous systems see strong investment focus. NATO General Secretary Mark Rutte proposed a five-fold increase in NATO’s air and missile defence and autonomous warfare capability, reflecting updated intelligence that Russia could reconstitute military capacity within five years. Investment will prioritise interceptors, radar systems, drone countermeasures, and scalable surface-to-air systems.
Actionable insight: Delivery speed, NATO interoperability, and production scalability are likely to shape supplier selection in missile defence and C-UAS programmes.
Start-ups and scale-ups prioritised in procurement reform. NATO leaders have committed to streamlining procurement for smaller firms and increasing funding through the €1bn NATO Innovation Fund (NIF). Particular focus areas include cyber resilience, AI-driven systems, and rapid deployment platforms. NATO alignment is increasingly viewed as a de facto requirement in national procurement pipelines.
Actionable insight: Early engagement with NIF or DIANA-backed initiatives, aligned with EU and UK pathways, can create a multiplier effect across national defence ministries and industry consortia, saving resources while increasing gains.
Political commitment to 5% target but timeline pushed back. While the 5% target is now Alliance policy, NATO extended the target date to 2035 and removed the word "all" from the final communiqué, reducing its enforceability.
Actionable insight: Prioritise political and commercial engagement in states moving fastest (e.g. UK, Poland, Finland, Baltics, Germany). Treat lower-commitment states as secondary targets unless budgetary clarity or local access improves. President Trump will take an increasingly dim view of NATO members that do not increase spending this year as he prepares for the 2026 US midterms.