Europe’s changing defence sector
In this video, Walter Scott client investment manager Murdo MacLean assesses Europe's shifting defence sector and why Walter Scott is underweight in this area.
4:31 mins Watch
Published on 05 September 2025
Key points:
- European defence spending is rising sharply, driven by geopolitical tensions and reduced US military support, boosting aerospace and defence (A&D) stocks.
- Walter Scott’s portfolios have been underweight in defence due to concerns over political budget drivers and customer concentration risks. Similarly, traditional defence firms face challenges like opaque contracts and limited strategic autonomy tied to government demands.
- Future warfare is likely to favour disruptive tech firms in cybersecurity, sensors, and software, offering diversified growth and better capital efficiency.
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