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Spending in the United States and some developing countries grew significantly in 2007. The U.S. defence budget expanded by 6.9% to USD 439.3 billion, with procurement expanding by more than 10%. Additionally, there were pockets of growth in areas such as India and the Middle East.
Europe, however, showed little growth, with only France and the United Kingdom having budgets exceeding 2% of gross domestic product. The European market has a growing need for integrated defence and security systems as well as for efficient and complete service solutions. This trend is likely to stimulate mergers and acquisitions as companies adapt their portfolios and capabilities. Further rationalisation and consolidation is also expected in order to overcome fragmentation and duplication of industrial capabilities and to reduce the technological gap with U.S. peers. Above all, Europe’s defence companies want to ensure long-term competitiveness on the world markets.
In developing nations, India has one of the largest and fastest growing budgets (8 – 10% a year). Contracts are generally tied to industrial cooperation agreements, and European companies are looking for opportunities to acquire companies and set up partnerships / joint ventures.
New military mission types
Military mission types and required capabilities are evolving. There is more emphasis on 
asymmetric warfare and “non-combat” missions. This includes counter insurgency, peace keeping and humanitarian missions. Military aircraft is attracting the greatest expenditure, with helicopter spending expected to be especially strong over the next decade.
Seeking better value for money, governments are increasingly asking the private sector to finance, build and operate services. Within Europe, funds are being aggregated to compensate for flat budgets. The European Defence Agency is playing a growing role in procurement.
Security
With terrorism emerging as the greatest external threat to public safety in many parts of the world, the global security industry is growing fast. Technologies such as automatic identification, detection and physical security are in significant demand. Geographically, the security industry is expanding across North America, Western Europe and Asia.
The United States is expected to have the highest growth rates in the coming years. The 9 /11 attacks led to increased security requirements at airports, ports and railways. The Department of Homeland Security’s budget was USD 35.6 billion in 2007, up by 7%, with the private sector expected to spend four times this amount.
In Western Europe, the security industry has grown steadily over the past decade. In the United Kingdom and Germany, high crime rates have led to demand for security equipment such as access control devices and monitoring equipment. At the European level, the need for a comprehensive security strategy is now being addressed through the European Security Research Programme. Funding to develop further technologies protecting citizens from threats such as terrorism, crime and natural disasters has been agreed upon with a budget of € 1.4 billion (2007–2013).
China and India will most likely be the growth drivers for the security industry in Asia.
