Germany’s pledge to massively boost military spending after years of restraint that’s left significant parts of its armed forces with outdated equipment is set to boost Europe’s defense industry and has already sent stocks higher.
Europe’s largest economy will inject €100 billion (¥12.9 trillion) into a fund to modernize the German army, Chancellor Olaf Scholz said Sunday in a speech to the lower house of parliament. By 2024, Germany will spend at least 2% of gross domestic product each year on defense, he added, in line with a NATO target the country has consistently failed to meet.
The move sparked gains of as much as 89% for sensor and radar maker Hensoldt AG in early Frankfurt trading, while Rheinmetall AG, a producer of tanks and personnel carriers, soared 49% to a record. French fighter jet maker Dassault Aviation SA jumped as much as 9.2% while service provider Thales SA gained 16%.