This report assesses how the strategic shift is reshaping CEE as a defence and security investment environment. It maps the region’s competitive advantages – frontline proximity, scalable industrial capacity, and deep engineering and IT talent, alongside the constraints that still shape project execution: infrastructure bottlenecks, administrative and procurement frictions, niche skills shortages, and increasingly stringent export controls for dual-use technologies. 

It also explains how Europe’s evolving funding architecture such as traditional cohesion instruments alongside the expanding EU defence toolbox, interacts with national incentives and procurement demand to move projects from R&D into serial production. The report also outlines the ways in which KPMG can support the transformation of the security and defence sector in CEE. Realising this “underdog advantage” necessitates an integrated advisory approach that spans strategy, technology, risk management, industrial participation, and workforce development. Within KPMG, the Defence & Security practice leverages multidisciplinary expertise across the EMA network (Europe, the Middle East, and Africa) to assist governments, armed forces, and multinational defence organisations in translating strategic objectives into operational capabilities.