Recent tensions in the Middle East have triggered renewed energy and supply shocks in Europe, once again highlighting how dependent the region still is on external suppliers. What was once mainly a policy ambition is increasingly turning into funding decisions and industrial action. For equity investors, that matters: European autonomy is becoming a long-term driver of where capital is spent and which industries may benefit.
From narrative to execution
Global fragmentation, geopolitical tensions and recurring supply shocks continue to challenge Europe’s traditional model, built on open trade and external dependencies. European autonomy represents a structural transformation away from this model – not towards isolation, but towards greater resilience and control in strategic areas.
Scaling up Europe’s response
Europe’s response is becoming more tangible and is accelerating. The Draghi Report on EU competitiveness estimates that achieving strategic autonomy is estimated to require around €750–800 billion[1] of additional investment per year, spanning energy, defence, technology, and industrial capacity.
Defence provides the clearest illustration of this shift. The current European framework enables up to €800 billion[2] in defence spending, including €150 billion through the SAFE (Security Action for Europe) instrument to support joint procurement. Initial SAFE approvals amount to tens of billions of euros, with total commitments expected to exceed €100 billion[3] across Member States.
This acceleration extends beyond defence. Funding via the Connecting Europe Facility will provide financing for cross-border energy infrastructure projects, reinforcing investments in electricity and hydrogen infrastructure, interconnections and electrification. At the same time, EU initiatives in areas such as nuclear research, healthcare preparedness and key enabling technologies are being scaled up, reflecting a broader push to strengthen domestic capabilities.
Supply chain resilience is also moving up the agenda. Europe is increasing efforts to secure access to critical raw materials, both domestically and through external partnerships. Recent trade agreements, including those with Australia, explicitly aim to diversify sourcing and reduce reliance on concentrated or unstable supply chains. This underlines a key shift: autonomy is not about isolation, but about building resilient and trusted networks.
Taken together, these developments mark a turning point. Defence has entered an industrial phase, energy sovereignty has regained urgency, and strategic sectors such as materials, healthcare and technology are seeing renewed attention.
Europe’s strategic challenges and response
Europe’s push for strategic autonomy is driven by a set of structural dependencies that recent shocks have brought into sharper focus.
- Energy dependence and price shocks
Recent geopolitical tensions, including conflict in Iran, have triggered a renewed energy shock, highlighting Europe’s exposure to external supply.
Response: Accelerated investment in energy infrastructure, electrification and renewables, supported by initiatives such as REPowerEU. - Technological dependence
Europe produces less than 10% of global semiconductors[4], despite being a major end market.
Response: The European Chips Act aims to mobilise over €40 billion to rebuild domestic capacity. - Healthcare vulnerability
Up to 80% of APIs and around 40% of medicines (particularly generic medicines) used in Europe are sourced from China and India.[5]
Response: Strengthening resilience through programmes such as HERA (Health Emergency Preparedness and Response) and EU4Health, alongside reshoring efforts.
Where the opportunities lie
We believe there is an improving investment case for European assets, as increasing autonomy may direct capital towards areas characterised by structural demand, policy support and capacity constraints. This combination can support pricing power, enhance earnings visibility and potentially extend growth cycles, although outcomes remain dependent on market conditions
The most compelling opportunities tend to lie along strategic value chains: defence supply ecosystems, energy infrastructure and electrification, critical materials, circular economy solutions, and enabling technologies supporting Europe’s industrial and digital capabilities. These segments are beneficiaries of increased spending and essential enablers of autonomy itself.
Why Candriam for European Autonomy
Selectivity matters. Not every “autonomy” exposure will translate into lasting value creation, particularly in capital-intensive and policy-driven industries. At Candriam, we approach European autonomy as a multi-year investment cycle and focus on where we see durable demand and strong competitive positions.
Our strategy combines top-down thematic conviction with bottom-up stock selection, supported by more than 20 years of experience in thematic and European equity investing and a thematic platform managing over €15 billion[6] in assets. This allows us to move beyond broad sector allocation and focus on companies we believe are directly exposed to, and enabling, Europe’s strategic transformation.
We structure the investment universe around five pillars: energy, aerospace and defence, technology, strategic industries and materials, and healthcare. Within these, we look for businesses with critical technologies, strong market positions or specialised capabilities embedded in European value chains — including companies that may be less visible to the broader market.
The aim is a high-conviction strategy that captures a wide opportunity set linked to Europe’s autonomy transition — from major contractors to specialised suppliers and technology leaders.
This article is the first in a series of five exploring the theme of European autonomy, featuring Candriam’s views across the key pillars. Look out for the next instalment in the series, focusing on Technology.
[1] Draghi, M. (2024), The Future of European Competitiveness. European Commission
[2] European Commission (2024), European Defence Industrial Strategy (EDIS).
Council of the European Union (2024), A Strategic Compass for Security and Defence.
[3] European Defence Agency (2024), Defence Data Report.
[4] Ranked: Semiconductor Production by Country or Region (1990-2032F)
[5] European Commission (2020), Pharmaceutical Strategy for Europe.
[6] Source: Candriam as of 31/01/2026