Industrial Sovereignty Is Rewriting the Rules

27 February 2026.

Across Western defence markets, spending is rising, which in itself is not new. What is changing is how governments decide where that money goes and whom it is intended to strengthen.

Procurement decisions are now tied directly to domestic industry, export growth and political alignment. Canada is formalising that shift. Germany is tightening control over high-profile munitions contracts. The UK is pushing ahead with long-delayed logistics reform. Different stories, but the same underlying theme. Defence policy and industrial policy are now closely intertwined.

For companies, this changes the question from “What is being bought?” to “Who is expected to benefit?”

Visiongain Top Takeaways

  • Defence spending growth is increasingly being used to build domestic industrial capacity, not simply to expand capability.
  • Canada is positioning itself as both a major future buyer and a more competitive aerospace and defence exporter.
  • Germany’s loitering munitions review underscores how pricing, political scrutiny, and industrial participation now influence procurement decisions alongside operational needs.
  • The UK’s logistics reform reflects growing recognition that sustainment and digital integration are central to operational readiness.
  • Across Western markets, long-term access will depend on industrial footprint, supply chain credibility and political alignment as much as technical performance.

Market Activity

Canada: Scaling Industry Alongside Capability

Canada’s new Defence Industrial Strategy sets out a clear ambition. The government describes it as a “long-term, whole-of-government approach to strengthening the defence industrial base as a pillar of national security, economic resilience and prosperity”.

The export objective is explicit:

“The new Defence Industrial Strategy supports Canada’s approach to trade diversification. It aims to increase defence exports by 50% and to strengthen whole-of-government line of sight on strategic export opportunities through Global Affairs Canada’s Defence Exports Division.”

The tone is deliberate:

“Canada is focusing on what it can control: rebuilding, rearming and reinvesting in the Canadian Armed Forces… strengthening the defence industrial base as a pillar of national security, economic prosperity and strategic autonomy.”

Alongside domestic expansion, the strategy emphasises collaboration with trusted allies, positioning Canada within an evolving transatlantic procurement landscape as defence supply chains across the Western alliance continue to adjust.

Maninder Sidhu, Minister of International Trade, outlined the scale of that ambition:

“Canada’s first-ever Defence Industrial Strategy builds on a sector of nearly 600 companies supporting more than 80,000 workers. These new initiatives will create an additional 125,000 high-paying careers while increasing defence exports by 50 per cent…”

The financial commitments reinforce the direction:

  • Defence spending rising to 2 percent of GDP, approximately $63 billion, in 2025–26
  • A pathway to 5 percent of GDP by 2035 under NATO’s investment pledge
  • $180 billion in defence procurement and $290 billion in defence-related capital investment opportunities over the next decade
  • An industry already contributing nearly $10 billion to GDP and supporting more than 81,000 jobs

This is more than a spending increase. It represents a strategic repositioning. Canada is expanding domestic capacity, deepening selected partnerships, and engaging more actively with European procurement frameworks.

For suppliers, long-term access will increasingly depend on domestic investment, technology transfer and structured industrial participation. At the same time, Canada is reinforcing its position not just as a buyer, but as a scaling industrial competitor within allied supply chains.

Visiongain Insight: Canada’s Defence Industrial Strategy signals a fundamental shift from capability acquisition to industrial leverage. By linking export expansion, NATO spending commitments and domestic capacity building, Ottawa is positioning defence not only as a security imperative but as an economic growth engine. For industry, competitive advantage will depend less on platform access alone and more on credible local partnership models, technology transfer depth and long-term industrial alignment within Canada’s expanding procurement ecosystem.

Germany: Loitering Munitions Under Parliamentary Scrutiny

Germany’s Bundestag budget committee has cut previously announced loitering munition contracts by more than half, imposing a €1 billion cap per producer.

Stark had been in line for up to €2.9 billion. Helsing’s potential award stood at €1.46 billion.

Several factors appear to have driven the intervention. Stark’s Virtus system was reportedly priced at roughly twice the level of Helsing’s HX-2, a disparity that drew parliamentary scrutiny. Neither platform has an established combat record. Political sensitivities have also played a role, particularly surrounding Stark investor Peter Thiel amid broader public and political scrutiny of Palantir in parts of Europe.

One element that has received less attention is Rheinmetall’s absence from the original allocations following its failure to meet key milestones. Given Rheinmetall’s central role in Germany’s defence industrial base, future allocations are likely to rebalance participation.

Germany is trying to reconcile rapid capability delivery with domestic industrial priorities and parliamentary oversight. That tension is structural rather than temporary, and similar pressures are emerging across Europe.

Visiongain Insight: Parliamentary intervention at this scale signals that loitering munitions are no longer a niche or purely tactical capability in Germany. They are now politically visible, industrially sensitive programmes. Pricing discipline, domestic participation and supply chain sovereignty are likely to shape future awards as much as technical performance. For suppliers, this increases the importance of industrial alignment and credible cost positioning alongside capability delivery.

United Kingdom: Logistics Reform Moves from Planning to Delivery

In the UK, the National Armaments Director Group has awarded the final major contract under the Business Modernisation for Support programme, described in the official release as the “final piece in place for defence support transformation”.

The £113 million contract has been awarded to the Digital Allies consortium of PA Consulting and Accenture, to deliver Defence Logistics Information Services. Total programme contracts now stand at £466 million and are expected to support up to 170 jobs, with scope for further expansion.

The new system will modernise warehousing, freight distribution and storage information services. It follows a £320 million contract for a Defence Equipment Engineering and Asset Management System and a £33 million agreement for foundational digital services.

With this award, the programme moves decisively from design into implementation. The objective is clear: replace ten separate legacy systems with a single digital platform covering inventory, munitions, warehousing and movements.

This may appear administrative, but logistics performance directly affects readiness and interoperability with NATO partners. Modern support systems are increasingly recognised as operational enablers rather than back-office upgrades.

Visiongain Insight: The UK’s investment in logistics digitisation reflects a broader shift in defence spending priorities. As platform procurement accelerates, ministries are turning equal attention to sustainment, data integration and supply chain resilience. Digital logistics architecture underpins availability, deployment speed and multinational interoperability. For industry, this signals sustained opportunity not only in frontline systems, but in software, integration and long-term support capability that determines operational readiness.

Market Outlook

Major defence primes are carrying record order books. Companies such as BAE Systems continue to report historic backlogs, reflecting sustained demand across both established platforms and newer capability areas.

Yet the defining feature of this cycle is not simply the scale of spending. It is fragmentation combined with domestic reinforcement. Allied governments are expanding defence budgets while directing a greater share of that expenditure through national industrial channels rather than fully integrated transatlantic supply chains.

Capital is flowing back into traditional platforms, munitions and sustainment programmes are receiving renewed capital, while emerging domains such as autonomous systems, digital integration and advanced sensing continue to attract accelerated investment. Procurement pathways are also being streamlined in several markets to bring industrial capacity online more quickly.

For established suppliers, alignment with national industrial objectives will shape long-term positioning. For new entrants, the current funding environment represents a rare access window, provided they can demonstrate political alignment, supply chain credibility and delivery at scale.

Visiongain Insight: The present defence cycle is characterised less by cyclical growth and more by long-term repositioning. Industrial sovereignty, export-control sensitivity, and alliance recalibration are reshaping how contracts are awarded and who benefits from them. Companies that treat this as a simple spending upswing risk misreading the market. Those who understand the political-industrial shift underpinning it will be better positioned to capture sustained value over the coming decade.

Related Visiongain Market Reports

Visiongain’s market reports provide the data and forward-looking analysis needed to assess funding priorities, capability development and execution risk across defence markets. Research is evidence-based and analyst-led, supporting informed decision-making across procurement, industrial planning, and long-term strategy.

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