A new Roland Berger report warns that Europe’s defence-innovation ecosystem is fragmented, risk-averse and chronically underfunded, leaving the continent exposed in an accelerating global race for military technology. The consultancy highlights a stark funding gap: EU members dedicate roughly 0.03% of GDP to military innovation versus 0.37% in the United States. That structural shortfall is compounded by decades-long development cycles and procurement systems that favour minimising short-term risk over rapid operational experimentation.
The report argues that many promising technologies stall in a ‘‘valley of death’’ between laboratory proof-of-concept and battlefield deployment because public procurement is conservative and inflexible. National funding patterns and institutional fragmentation dilute strategic impact and prevent the rise of pan‑European defence champions. Start-ups and small agile teams are particularly disadvantaged by bureaucratic barriers that make it difficult to scale prototypes into mass-production or fielded capability.
Roland Berger points to Israel and Ukraine as counterexamples where operational urgency has driven tight collaboration between armed forces, industry and start-ups, shortening iteration cycles from years to weeks. In those contexts, continuous testing, small cross-disciplinary teams and tolerance for failure have accelerated deployment of software-defined and digitally enabled systems. The report underlines a shift in the character of contemporary war: speed, software and digital integration increasingly determine battlefield advantage.
To close the gap, the consultancy outlines a three‑pillar roadmap: streamline regulation and procurement through flexible frameworks and rapid evaluation mechanisms; strengthen cross-border industry‑technology‑defence linkages to enable multinational projects; and coordinate strategic funding at the European level so innovation funds and industrial policy align with real operational needs. The aim is not merely greater spending but smarter, pooled spending that funds fast‑cycling capabilities rather than only long-term platforms.
If unaddressed, Roland Berger warns, Europe risks becoming a dependent buyer rather than a technological leader, eroding strategic autonomy at a time when civil and military technologies are converging and the geostrategic environment is turbulent. The report’s message is blunt: deterrence in the decades ahead will depend on the capacity to field rapid, software-centred responses, and current European institutions are poorly set up to deliver them. Reform thus has political as well as industrial consequences, touching on sovereignty, industrial consolidation and the relationship with NATO and transatlantic partners.
Reform faces immediate obstacles. Member states jealously guard procurement sovereignty and defence industrial policy, and harmonising export rules, certification standards and funding mechanisms will be politically difficult. Yet the alternative — incremental tinkering within existing structures — is likely to leave Europe technologically trailing peers that couple commercial tech dynamism with military urgency. The policy choice is therefore stark: adapt procurement and funding to the age of digital warfare, or accept a diminished strategic role.