Global defence spending crossed $2.443 trillion in 2025. For the third consecutive year, every major region increased its military spending in real terms. Europe's growth trajectory is the steepest it has been since the early 1980s. The structural drivers of this spending — Russia-Ukraine, China-Taiwan tensions, Middle East instability, North Korean provocations — are not going away in any foreseeable timeframe.
For prime contractors, the numbers are extraordinary. Lockheed Martin's order backlog stood at $176 billion — approximately three years of revenue at current delivery rates. RTX reported an order backlog of $206 billion. BAE Systems' operating profit was up 14% year-on-year. These are not one-year windfalls; they are the financial expression of a sustained multi-year procurement cycle.
The most consequential dynamic in the current defence market is the squeeze on Tier 2 and Tier 3 suppliers. Component shortages across precision guidance electronics, titanium forgings, propellant precursors, and certain specialty steels are creating bottlenecks that add months to delivery timelines. Propellant availability remains tight, with global production running substantially below the demand implied by current munitions orders.
"Defence is no longer the sector that polite society avoided at dinner parties. The pension funds noticed. The sovereign wealth funds noticed. The question now is whether supply can keep up with demand."
The supply chain constraints at the prime and Tier 1 level create the structural opportunity that licensed intermediaries and alternative supply chain operators are positioned to fill. When Western prime contractors cannot deliver 155mm ammunition on contracted timelines, buyers look elsewhere. The UAE's position as a licensed procurement hub — able to access both Western and non-Western supply chains within a compliant regulatory framework — is precisely adapted to this environment.
The question for the next decade is not whether demand will remain elevated — the structural drivers are durable — but whether the industrial base can expand quickly enough to meet it. That gap — between what governments need and what Western industry can deliver at contracted timelines — is the defining commercial opportunity in the global defence market for the foreseeable future.