EU defence spending €418bn, EDPCIs €325m, Tekever wins Watchkeeper replacement, Rheinmetall Space Norway MoU, BAE BATS milestone

EDA reports EU-27 defence spending at €418bn in 2025, projected €454bn in 2026 with R&D rising to €20bn

The European Defence Agency's Defence Data report, released on 16 July 2026, put EU-27 defence spending at €418 billion in 2025, a 20% year-on-year rise, with a projected €454 billion for 2026 equal to 2.4% of EU GDP. Defence investment is forecast at 36% of total expenditure in 2026, and defence R&D is set to climb from €17 billion in 2025 to €20 billion, comfortably above the EDA's 20% collaborative-investment benchmark. EDA Chief Executive André Denk pointed to a trajectory of up to €547 billion by 2029 on current trends, framing this as underpinning the Defence Readiness 2030 initiative. Twenty-three Member States now spend at least 2% of GDP on defence. For founders, the R&D line is the number that matters: a €3 billion year-on-year increase in national defence R&D budgets is the pool your Series A pitch to MoD innovation units and primes should be sized against.

Source: EU defence spending: €418 billion in 2025, projected to €454 billion in 2026, GlobalSecurity.org / EDA

Commission proposes five European Defence Projects of Common Interest under EDIP, backed by €325m

On 3 July 2026 the European Commission tabled five European Defence Projects of Common Interest (EDPCIs) under the €1.5 billion European Defence Industry Programme, allocating €325 million from the work programme adopted on 30 March 2026. The five projects cover drones and counter-drone systems, maritime and seabed defence, space, air and missile defence, and Eastern Flank Watch, and on average involve 18 Member States each, with Ukraine participating in four of the five. The framework is explicitly aligned with NATO capability priorities and is designed to bind long-term multinational demand around industrial workstreams too large for any single country. For ventures, EDPCIs are the demand-signal to watch: national procurement bodies will structure sub-contracts and consortium slots around these five buckets, so map your product now to one specific EDPCI thread rather than pitching generically to EDIP.

Source: Commission proposes five joint defence projects to strengthen Europe's industrial capabilities, DG DEFIS, European Commission

UK MoD selects Tekever AR5 to replace British Army's Watchkeeper ISR fleet

The UK Ministry of Defence has selected Portuguese dual-use manufacturer Tekever's AR5 surveillance drone to replace the British Army's ageing Watchkeeper fleet, according to reporting on 25 July 2026. The Watchkeeper WK450, retired earlier in the programme cycle after a troubled service life, leaves a persistent tactical ISR gap that Tekever's AR5, a maritime-optimised medium-altitude long-endurance platform already in Ukrainian and Portuguese service, is being brought in to fill. The award places a European scale-up on the roster of core British Army ISR suppliers alongside far larger primes, and continues Tekever's trajectory following its 2024 unicorn round. For founders, this is confirmation that European MoDs will now buy combat-proven kit from scale-ups over legacy prime programmes: an operational Ukraine deployment record has become a de facto reference customer for NATO procurement.

Source: UK MoD selects Tekever AR5 surveillance drone to replace Watchkeeper, Defence Industry Europe

BAE Systems completes integration and deployment testing of BATS counter-drone system

BAE Systems announced completion of integration and deployment testing of its BAE Anti Threat System (BATS), described as a milestone in the rapid development of its latest counter-drone capability, in reporting dated the week of 21 July 2026. The programme has moved from concept to field-ready testing on a compressed timeline that reflects how the C-UAS market has restructured since 2023, with primes now iterating in months rather than years to keep pace with drone-threat evolution observed in Ukraine and the Red Sea. BATS joins a crowded European C-UAS field including MBDA, Rheinmetall, Diehl and dozens of scale-ups working effectors, radars and command layers. For ventures in C-UAS, the strategic read is that primes are closing the integration-speed gap that once favoured startups: differentiation now has to sit in a specific sub-layer, whether RF sensing, autonomy or low-cost effectors, rather than in end-to-end system pitches.

Source: BAE Systems completes BATS counter-drone integration testing, Defence Industry Europe

Rheinmetall and Space Norway sign MoU on space-based defence capabilities

Rheinmetall AG and Space Norway AS signed a Memorandum of Understanding to expand cooperation on space-based capabilities for defence applications, per reporting the week of 21 July 2026. The deal pairs Europe's fastest-growing land-systems prime, whose order backlog has ballooned past €60 billion, with Norway's state-owned satellite operator, and signals Rheinmetall's continued push beyond its historical armour-and-ammunition base into ISR, SATCOM and space-domain services. Space Norway's Arctic and high-latitude coverage assets are directly relevant to NATO's Eastern and Northern Flank surveillance requirements now anchored in the EDPCI framework. For founders in space-defence, the message is that primes are locking in national operator partnerships to bid into EDF and EDIP space calls: if you sell payloads, ground segment, tasking software or GEOINT analytics, get on the Rheinmetall and Space Norway sub-supplier radar now rather than approaching either institution cold in 2027.

Source: Rheinmetall and Space Norway sign MoU on space-based defence capabilities, Defence Industry Europe