Norway's Defence Boost – industry and investments

In June 2024, a unanimous parliament (Stortinget) approved the largest rearmament of the Armed Forces in Norwegian peacetime history. In connection with the rearmament, Chief of Defence Eirik Kristoffersen has described the situation as follows:

"The procurement processes between the defence sector and industry were designed for a different era. They were designed for a time when we had plenty of time and little money. Now we are short of time and have plenty of money."

General Eirik Kristoffersen (DN, February 2025, Norwegian, login required)

The funds have been granted. The investments have been approved. What remains – and which creates significant opportunities for Norwegian companies, investors and international players – is key aspects of the implementation. But this requires navigating a regulatory landscape that is not adapted to the new pace.

The long-term plan for the defence sector 2025-2036 entails a total budget increase of NOK 648 billion over twelve years. According to a press release from the Government, an updated long-term plan for the defence sector will be presented Friday 27 March. The defence budget has increased from around NOK 60 billion in 2021 to NOK 112 billion in 2026, excluding support for Ukraine. Including the five-year Nansen Programme – Norway’s extraordinary support for Ukraine – the total defence budget for 2026 is NOK 180 billion. 

Norway will thus be spending 3.4 per cent of GDP on defence in 2026. At the NATO summit in The Hague in June 2025, all allies committed to a new target of 5 per cent by 2035. Of this, a minimum of 3.5 per cent is to be allocated to military defence, whilst up to 1.5 per cent may cover civilian expenditure that supports defence capabilities, such as infrastructure, civil preparedness, energy and supply security, and measures against hybrid threats and cyberattacks.

For Norway, the 1.5 per cent component alone is estimated to be worth NOK 80–90 billion per year once the target is met. This will generate demand across a wide range of civilian sectors, from energy and transport to information technology and real property.

Norway’s largest single defence investment ever was announced in August 2025: the purchase of at least five British Type 26 frigates from BAE Systems, at an estimated value of around GBP 10 billion. The bilateral agreement was signed on 4 September 2025, and contract negotiations with BAE Systems are ongoing. The frigates are due to be delivered from around 2030. Norway has also entered into an agreement for purchase of two more submarines from TKMS.

What makes the frigate agreement particularly interesting from an industrial perspective is that the British authorities have guaranteed industrial cooperation with Norwegian industry equivalent to the entire procurement value – pound for pound – through subcontracting, technology cooperation and maintenance contracts over the vessels’ service life. The submarine contract also entails commitments for industrial cooperation.

Industrial cooperation agreements (previously known as offset agreements) are not a new instrument in Norwegian defence procurement, but the scale of the frigate contract is unprecedented and could have a significant impact on Norwegian industry and investment activity in the decades to come.

The investment programme has a broad scope: government defence procurement, industrial cooperation agreements that channel capital into Norwegian industry, and a civil preparedness component that extends far beyond the defence sector in the strict sense.

Norwegian defence exports increased by nearly 40 per cent in 2024. Globally, interest from private equity and venture capital has grown significantly, driven by rising defence budgets and the emergence of dual-use technology.

We are seeing the same interest in Norway, with an increased influx of enquiries from technology companies considering positioning themselves as defence suppliers, from investors identifying the Norwegian defence industry as an attractive segment, and from international players seeking to understand the regulatory framework. The sector is no longer the exclusive territory of established players.

However, the opportunities are subject to a regulatory framework that is significantly more challenging than in most other sectors, and which has a broader scope than many expect. Going forward, we will provide insights into the framework to facilitate easier access for suppliers and investors.