05 May 2026

Podcast Episode 22: European Defence, Readiness, and the New Economics of Security

In this episode, SBAI’s Brian Digney is joined by Jonathan Dimson, Senior Partner at McKinsey & Company in London, where he leads the firm’s defence work across Europe. Jonathan explores the rapidly evolving European defence landscape, from the shifting tone at the Munich Security Conference to the growing gap between the clarity of US strategy and the more cautious, less coordinated approach across Europe. Against a backdrop of conflict in Ukraine and the Middle East, defence preparedness is becoming an increasingly urgent priority for governments and investors alike.

Jonathan breaks down what “readiness” really means in practice, moving beyond headline spending to a full defence system – from funding and procurement through to production, operational capability and continuous innovation. Drawing on lessons from Ukraine, he highlights how the economics of warfare are changing, with lower-cost, software-driven technologies such as drones reshaping traditional models and accelerating the pace of innovation.

The conversation also examines the scale of capital required to support this shift, from venture investment through to infrastructure, industrial capacity and resilience. Jonathan outlines the growing importance of “resilience spending” and the opportunities this creates for institutional investors, while also addressing structural challenges across Europe including fragmentation, procurement speed and workforce constraints. Looking ahead, he argues that success will depend on Europe’s ability to balance long-term peace with credible deterrence and defence capability.

Key takeaways include:

Defence readiness is a system-wide challenge, requiring alignment across funding, procurement, production, operations and innovation.
The economics of warfare are shifting, with lower-cost, software-driven technologies playing an increasingly central role.
Private capital has a significant role to play beyond venture, particularly in infrastructure, industrial capacity and resilience.
Europe faces structural challenges, including fragmentation, slow procurement and workforce constraints.
Public debate on defence spending trade-offs remains underdeveloped in many countries.
Long-term success will depend on balancing deterrence with efforts to secure lasting peace.

Return to listing