.AI defense

The UK and Germany are emerging as the core of Europe’s AI‑driven defence‑tech boom. Private capital has jumped to $4.3 bn since 2022, backed by NATO’s 5 % GDP defence‑spending pledge and national policies such as the UK’s £5 bn tech‑investment package and Germany’s €100 bn budget from 2026. Start‑ups like Helsing, Quantum Systems, PhysicsX, Cambridge Aerospace, Tekever and Stark have secured multi‑hundred‑million‑euro rounds and major contracts with the RAF, German army and NATO allies. Strong talent pools, manufacturing bases and AUKUS links aid scaling, but slow procurement, export‑control hurdles and a shortage of security‑cleared engineers remain key obstacles.

The Federal Reserve cut rates by 0.25 percentage points in December, pairing a modest “hawkish” trim with a new $40 billion‑monthly Treasury bill purchase program that quietly eases liquidity. Officials forecast stronger 2026 growth and signal only two more cuts before 2027, prompting a market rally and expectations of a “Santa Claus” surge. Meanwhile, NATO’s 5 %‑GDP defense‑spending target is driving a $4.3 billion influx into European AI‑defense startups, creating investment opportunities as legacy contractors partner with agile AI firms.

.Leonardo unveiled “Michelangelo Dome,” an AI‑driven, open‑architecture protection system that fuses radar, sensors and communication layers to detect and neutralize threats—from missiles to drone swarms—across sea, air and land. Aiming for full deployment by decade’s end, the dome supports Europe’s push for sovereign defense amid rising geopolitical risk and aligns with EU funding and NATO spending targets. Its modular, network‑centric design promises real‑time data sharing among NATO/EU members, while creating recurring software‑service revenue and positioning Leonardo at the forefront of AI‑enhanced warfare.