The Netherlands has committed to a much larger defence bill, but increasing government budgets is only one part of the industrial problem. Domestic manufacturers also need working capital, production capacity and long-term finance if they are expected to supply a bigger share of equipment.
Reuters reported in August that talks between the Defence Ministry and Dutch insurers had stalled over questions about due diligence and the suitability of defence assets for insurance portfolios. The tension is important because insurers and pension-linked institutions manage enormous pools of long-term capital, exactly the kind of money policymakers would like to mobilise for strategic investment.
The asset class does not fit neatly into insurer portfolios
Insurers tend to hold large fixed-income portfolios because their liabilities are long dated and highly regulated. Direct stakes in smaller defence manufacturers can be harder to justify, particularly when businesses have limited public disclosure or depend on sensitive government contracts.
That is why the industry's preference for bonds matters. A state-backed or government-issued defence instrument could match insurer portfolios more naturally than asking them to become direct equity investors in specialised suppliers. The financing structure may therefore matter as much as political willingness.
The Dutch defence industry is still small relative to the ambition
The Netherlands has capable companies in naval shipbuilding, radar, aerospace components, vehicles, drones and communications systems, but the sector is smaller than those of France, Germany or Britain. Reuters cited Dutch defence-sector revenue of about €10.2 billion in 2025 and a PwC estimate that domestic suppliers would need to expand output materially to absorb expected procurement demand.
That creates a sequencing problem. Institutional investors want large, liquid opportunities with clear information. Smaller suppliers need capital before they become large enough to offer those opportunities. Public guarantees, debt funds or procurement commitments may be needed to bridge that gap.
More spending will not automatically create more Dutch capacity
A higher NATO target can increase orders without necessarily increasing domestic industrial depth. Equipment can still be imported, contracts can flow to multinational primes and local suppliers can remain constrained by labour, finance or production space.
For Dutch industrial policy, the key test is therefore not the percentage of GDP spent on defence. It is how much of that spending builds repeatable capability inside the country and whether finance reaches companies early enough for them to expand before procurement demand arrives.