FTI Consulting Global Public Affairs Snapshot: Munich Security Conference 2026: Europe presses the accelerator

Each year, the Munich Security Conference delivers a three-day diplomatic whirlwind that offers a vital barometer of the most urgent international defence and security trends of the day.

This year, the health of the transatlantic alliance between the U.S. and Europe firmly took centre stage. Following recent tensions over Greenland, threats of tariffs from the United States against NATO allies and the approach taken by the U.S. National Security and National Defence Strategies, the heads of State and Government of NATO’s European members were out in force at the event.

The message from European capitals on the Conference floor was clear: in a more contested security environment and amid uncertainty over the relationship with the U.S., Europe intends to assume greater responsibility for deterrence within NATO – backed by higher investment, faster procurement and industrial mobilisation.

Alongside continued support for Ukraine – reaffirmed with a recent $38 billion announcement from partners in military assistance in 2026 – nuclear deterrence also emerged as a central flashpoint, with France and Germany advancing discussions on a more explicitly European dimension within NATO’s deterrence architecture. However, the debate is far from settled. For instance, Spanish Prime Minister Pedro Sánchez publicly cautioned against a renewed nuclear emphasis, underscoring Spain’s longstanding commitment to nuclear non-proliferation and warning against steps that could escalate strategic tensions.

In the conference’s aftermath, FTI Consulting’s experts assess the implications of this ongoing strategic shift for Europe. With European countries ejected by “shock therapy” from the post-Cold War dividend, we look at the developing trends for the continent’s defence industry as the political imperative to accelerate rearmament efforts increases.

The results of “shock therapy”

Over the past year the Trump Administration has sought to pursue an, “America First” foreign policy approach towards its NATO allies in Europe. The firm message being that the continent needs to shoulder more of the “burden” on European defence. This approach and in particular Washington’s fluctuating levels of support to Ukraine, and ongoing calls for increased autonomy over Greenland have generated strong perceptions amongst European leaders of strategic unpredictability from the NATO alliance’s most powerful member.

With transatlantic ties bruised, arriving in Munich last week, U.S. Secretary of State Marco Rubio sought to communicate a softer message to allies, that marked a shift in tone compared to last year’s remarks by U.S. Vice President J.D. Vance. Whilst not necessarily being too different from others in the Trump Administration in content, Rubio’s address deployed language to soothe relations with America’s partners, stressing the “intertwined” destinies of Europe and the U.S.

Yet, whilst his remarks were welcomed across the floor of the Conference, European leaders are now striving in a more “independent” direction. There were variances in the individual assessments offered by European leaders of the situation. For instance, German Chancellor Friedrich Merz highlighted a “deep rift” between the U.S. and Europe, whilst UK Prime Minister Keir Starmer rejected the notion of a transatlantic “rupture”, instead calling for a “radical renewal” of relations. However, what was striking was the overall unity in message from so many leaders on what European countries must now do: Europe in the face of an historic “awakening” must pursue greater strategic independence in a renewed era of great-power competition.

However, leaders stressed that this independence should not result in a full decoupling from the United States. Rather, an urgent strengthening of the continent’s armed forces and defence sectors with surged investment to build a more balanced and durable transatlantic alliance, and ultimately a “more European NATO.”

Trends to Consider

The consequences going forwards of this new “emergency mindset” political approach could be significant. In the immediate term, it seems that a political Rubicon has been crossed. Uncertainty regarding U.S. strategic guarantees is now being priced into European defence planning, whilst policymakers are calling for accelerated capability development alongside industrial – and capital – mobilisation.

This situation is likely to foster implications for defence industries on both sides of the Atlantic:

• End market fragmentation, reduce duplication: European defence policy is slowly beginning to recognise the need, at least politically, to create greater structural openness to facilitate a more common European defence industrial base. Leaders, notably UK Prime Minister Keir Starmer, acknowledged that “fragmented industrial planning and procurement”, divergent standards and parallel national programmes have diluted operational impact and industrial competitiveness. Starmer argued that deploying “over 20 types of frigates, and 10 types of fighter jet” is “wildly inefficient” and “harms our collective security.” The objective is clear: build a more coherent ecosystem able to deliver scale, resilience and operational effect – by breaking what Starmer called “bad habits” linked to the US security umbrella and “build[ing] a joint European defence industry.” Yet, in realising this objective significant bureaucratic hurdles and competing priorities between European capitals will make this a difficult political ambition to realise. Despite the rhetoric a move towards a more shared industrial base will take time and success is not guaranteed.
• Urgent demand to develop strategic enablers: Focus is increasingly shifting towards the need for Europe to develop its own, wider array of strategic enablers including in fields such as ISR, strategic airlift, secure communications and space-based capabilities – where European reliance on U.S. systems remains significant. The emphasis is shifting towards strengthening sovereign capacity in these domains while preserving NATO interoperability and long-term security of supply.
• Defence for prosperity: Defence spending is increasingly framed not only as a security imperative, but as a deliberate instrument of industrial policy. European leaders are explicitly linking higher defence investment to economic resilience, supply chain security and the strengthening or reshoring of critical production capacity. The sector is positioned as a catalyst for technological leadership in areas such as artificial intelligence, cyber or advanced manufacturing, while sustaining high-skilled employment across European countries. As put by the President of the European Commission, Ursula von der Leyen, the need to “get money out the door” to fund “real defence capabilities” will “turbocharge a new industrial deal that will not only keep us safe, but be an engine of growth, delivering prosperity for Europeans for decades to come.” In this context, the post-Cold war narrative of “security dividend” has been replaced by one of “security-driven competitiveness”, with defence budgets viewed as strategic capital that underpin long-term growth, innovation capacity and geopolitical leverage.
• Accelerated sovereignty – “Buy fast, but European”: Sovereignty is increasingly embedded in defence procurement strategies. Governments are aligning acquisition decisions with industrial objectives, using offtake agreements, production financing and regulatory acceleration to anchor value creation in Europe. This shift is driving consolidation and scale, while reinforcing cross-border industrial integration. Facilitating sufficient market access for non-EU suppliers and their ability to participate in the EU’s significant defence financing mechanisms is also becoming an increasingly important question as the continent seeks to rearm. Over time, this trend is expected to strengthen supply-chain resilience and reinforce European industrial capacity, but increases coordination demands and political negotiations between allies.

Conclusion

The MSC this year further emphasised Europe’s definitive break from post-Cold War complacency. For industry, the message is clear: Europe is rearming, the timelines are compressed, and the rules are being rewritten. Success requires strategic positioning, and agility to deliver capabilities that meet Europe’s urgent needs, while respecting the unique political considerations of the moment. Moreover, in the context of rapid battlefield-driven advancements in Ukraine, there is an increasing need too for new technological capabilities to be “pulled through” and made battle-ready at speed.  

For companies, the strategic question is not whether European defence markets will expand, but in what manner and configuration. Positioning decisions taken in 2026 may determine competitive relevance for the next decade.

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