Finland boosts defense spending

Summary

Marketplace Morning Report: Finland Boosts Defense Spending

Release Date: April 2, 2025

The latest episode of the Marketplace Morning Report delves into Finland's significant increase in defense spending, the burgeoning defense technology sector in the Nordic nation, a brief overview of global financial markets, and an engaging exploration of London's historic Borough Market. Hosted by Marketplace and featuring reports from the BBC World Service, this episode offers comprehensive insights into economic and business developments shaping the day.

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1. Finland's Defense Spending Surge

Overview: Finland has announced a substantial boost in its defense budget, increasing expenditure from 2.41% to 3% of its GDP over the next four years. This move is primarily driven by escalating security concerns in the region, particularly in light of the ongoing conflict in Ukraine.

Defense Technology Boom: The war in Ukraine has catalyzed a boom in Finland's defense technology industry. With a population of just 5 million, Finland hosts 368 defense tech companies, 40% of which are startups or scale-ups exhibiting growth rates between 30% to 40%. Helsinki has emerged as one of Europe's top five cities for defense tech investment.

Key Insights and Quotes:

• Timur Toykonen, CEO of Varjo:

  • "The war in Ukraine just kind of put everything on steroids, you know. Things started happening a lot fast and I guess we're all aware, at least here in these parts of Europe, of the new reality, which is that the world is a lot more insecure than it used to be." (01:07)

  • "We are today supplying more than 80 synthetic training programs across NATO, many of them in Europe. And we definitely have seen over the last month or two much more ambitious plans in ramping up synthetic training for various things in European countries." (01:54)

• Nicholas Nelson, US Defense Tech Investor:

  • "There's a phrase I like to leverage, which is the tyranny of geography. The closer you are to a threat, the more likely you is to perceive it as more apparent and indeed more existential." (02:36)

  • "They also have a memory of the Winter War, which transpired during World War II, where they were invaded by the Soviet Union." (02:51)

Supportive Infrastructure: Finland's strong startup ecosystem plays a crucial role in its defense tech success. Maria01, the largest startup campus in the Nordics, facilitates collaboration among entrepreneurs and tech professionals. Kursi Kokko from Business Finland highlighted the government's commitment to fostering innovation through a $130 million program supporting defense and resilience companies.

• Kursi Kokko, Business Finland:
  • "Our current government, they are really enforcing us to this kind of public private collaboration for supporting the research and development initiatives, especially the small, medium and startup companies." (03:30)

Challenges: Despite the growth, the sector faces hurdles in attracting global talent. Competitive salaries and the challenging Finnish climate make it difficult to match other tech hubs like Silicon Valley or London. However, Finland remains attractive due to its flat organizational hierarchies and a strong culture of innovation.

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2. Global Financial Markets Snapshot

In the financial segment, Marketplace Morning Report provided a concise overview of recent market activities:

• Asian and European Markets:

  • China and Hong Kong stocks remained relatively flat.
  • European shares experienced a decline as investors anticipate details regarding President Trump's trade tariff policies.

• Gold Prices:

  • Amidst global uncertainties, gold prices edged higher, reaching an all-time high of $3,148.88 per ounce, reinforcing its status as a safe-haven asset.

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3. Exploring London's Borough Market

Transformation and Modern Appeal: Liana Byrne takes listeners on a vibrant tour of Borough Market, one of London's oldest and most famous food markets. Historically a wholesale market, it has transformed into a trendy foodie destination attracting around 20 million visitors annually.

Market Highlights:

• Variety of Stalls:

  • From traditional offerings like fresh salmon at Shell Seekers to innovative treats like the sweet and creamy sea urchin at Atlantic Edge, the market showcases a diverse array of foods.

• Entrepreneurial Stories:

  • Richard Stark, Fruit Ears:

    • "Possible to buy local when everything's in season in the summer. I've got a lot of farms in Kent that we know. Got good cherry suppliers, apple suppliers." (05:45)

  • Jed Hall, Shell Seekers:

    • Emphasizes maintaining high standards and controlling costs by sourcing directly from fishermen and owning boats.

• Impact of Social Media:

  • Taylor Wellem, Manager of Pulled Pork Stall:

    • "We've been here since about 2020... there's massive growth. Being in the public eye, knowing that people are filming you all the time. It's cool. It's great. It's fun to be a part of." (07:42)

  • Contrastingly, Emily Broughton, Humble Crumble:

    • "Because it is so huge on social media, everybody is filming, which is absolutely fine, but we just don't." (08:24)

  Social media platforms like Instagram and TikTok have been instrumental in the growth of many stalls, driving visibility and customer engagement. However, not all traders are comfortable with the constant digital attention, highlighting a balance between tradition and modern marketing demands.

Economic Pressures: Rising rents and overheads have posed challenges for long-standing vendors. For instance, annual rent for a prime pitch has surged to approximately $1,100 per month in 2024, alongside increasing service charges.

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Conclusion

The Marketplace Morning Report episode from April 2, 2025, offers a multifaceted exploration of Finland's strategic defense investments and the dynamic defense tech landscape, underscored by historical and geographical influences. Additionally, the episode provides valuable insights into current global financial trends and captures the essence of London's Borough Market amidst the digital era. Through engaging interviews and on-the-ground reporting, listeners gain a comprehensive understanding of the intersecting forces shaping today's economic and business environments.

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This summary captures all key discussions, insights, and conclusions from the episode, incorporating notable quotes with proper attribution and timestamps to enhance clarity and engagement for listeners who may not have tuned in.

Transcript

[Liana Byrne]

This Marketplace podcast is supported by Commvault. Businesses can recover data as well as cloud applications and platforms after a cyber attack in just minutes with Commvault, so they can become a continuous business.

[Sarah Rogers]

How a Nordic country has become a hotspot for defence technology Live from the uk, this is the Marketplace morning report from the BBC World Service. I'm Sarah Rogers. Good morning. First to Finland and its plans to boost defence spending by $3.2 billion. The government says it wants to raise expendit from 2.41% to 3% of its economic output over the next four years. Citing security worries. The Nordic country has seen a boom in its defence tech industry since the start of the war in Ukraine. The BBC's Maddie Savage reports from Helsinki.

[Maddie Savage]

That's the sound of a J16 fighter jet flying above a mountain range. But it's not a real plane. It's a pilot training simulator developed by Varjo, a big name among the hundreds of companies in Finland that help countries protect themselves from war. The firm's CEO is Timur Toykonen.

[Timur Toykonen]

The war in Ukraine just kind of put everything on steroids, you know. Things started happening a lot fast and I guess we're all aware, at least here in these parts of Europe, of the new reality, which is that the world is a lot more insecure than it used to be.

[Maddie Savage]

Finland, with a population of just 5 million, has 368 defence tech companies. According to research for Tesi, a state funded venture capital company. 40% are startups and scale ups, with many growing at rates of 30 to 40%, especially if their tools can also be used in other industries. Helsinki is now among the top five cities in Europe for defence tech investment. And Varjo's CEO says he's expecting the scene to keep expanding due to the current tensions between Europe and the US.

[Timur Toykonen]

We are today supplying more than 80 synthetic training programs across NATO, many of them in Europe. And we definitely have seen over the last month or two much more ambitious plans in ramping up synthetic training for various things in European countries.

[Maddie Savage]

Finland borders Russia and the government here spent a greater proportion of its budget on defence than many other European countries, even before the war in Ukraine. There's also military conscription here. Many experts believe these factors have encouraged Finnish entrepreneurs and investors to focus on defence tech rather than other fast growing industries like energy and financial technologies.

[Nicholas Nelson]

There's a phrase I like to leverage, which is the tyranny of geography. The closer you are to a threat, the more likely you is to perceive it as more apparent and indeed More existential.

[Maddie Savage]

That's Nicholas Nelson, a US defence tech investor based in Europe.

[Nicholas Nelson]

They also have a memory of the Winter War, which transpired during World War II, where they were invaded by the Soviet Union.

[Maddie Savage]

Another factor behind Finland's defence tech success is its strong startup ecosystem. This is Maria01, a former hospital that's been transformed into the largest startup campus in the Nordics. A place where entrepreneurs, founders and others in the tech scene can collaborate. I'm meeting Kursi Kokko from Business Finland, a Finnish government agency that promotes investment and innovation. She's the head of a $130 million program supporting defence and resilience companies.

[Liana Byrne]

Our current government, they are really enforcing us to this kind of public private collaboration for supporting the research and development initiatives, especially the small, medium and startup companies.

[Maddie Savage]

She says the sector is facing challenges though, like recruiting the global talent needed to help build defence tech companies in Finland. Its salaries and weather can't usually compete with tech hubs like Silicon Valley or even London, although she says it's still attractive due to its flat hierarchies and culture of innovation.

[Sarah Rogers]

Maddy Savage in Finland. Okay, let's do the numbers. China and Hong Kong stocks ended pretty flat and European shares ticked lower as investors await details of President Trump's trade tariff. Gold prices seen as a safer investment during times of uncertainty edged up bullion touched an all time high of $3,148.88 per ounce. And on marketplace. We've been visiting actual marketplaces as part of our special Tricks of the Trade series. Borough Market in London attracts some 20 million visitors a year looking for a bite to eat as our very own Liana Byrne went to sea.

[Liana Byrne]

Just off the main road. Borough Market's 100 stalls nestle between several Victorian railway viaducts. It's quite cool. Twinkling fairy lights all around under high vaulted arches. We're a stone's throw from the Thames and London Bridge on an ancient site. There's been a market around here for a thousand years and I'm going to take a look around. I can smell a very strong Stilton coming from somewhere. There's Taste of Croatia to my left there's a bread stand. There's also meats. Got a fun one here called Spice Mountain. Thirty years ago, this was a struggling wholesale market, but it was reinvented as a fashionable foodie destination and has in turn helped reinvent Once down at Heel Southwark. It's run by a charity that brought in $10 million last year, with investment properties helping to subsidize the Market Stark's Fruit Ears has been run by the same family for decades. Richard Stark is manning the stand and he tells me a key principle where.

[Richard Stark]

Possible buy local when everything's in season in the summer. I've got a lot of farms in Kent that we know. Got good cherry suppliers, apple suppliers. A lot of the veg comes from Kent, but obviously this time of year it's all imported.

[Liana Byrne]

But just as prices can spike, rents and overheads have also risen. Annual rent for a large prime pitch rose in line with inflation to about $1,100 a month in 2024. Then there are service charges on top. It can be tough to get a pitch, but seafood specialist Shell Seekers has been here for 27 years. Jed hall peeks his head over a fillet of fresh salmon. He says the trick to keeping costs down and standards high is skipping the middleman.

[Richard Stark]

Got our own boat down in Dorset. We've also got friends with boats, neighbouring boats that we buy fish from. Obviously we've got the cost of the boat, cost of the fishermen that work on the boat, cost of regulations and licenses that you need. That has unfortunately come back to the customer.

[Liana Byrne]

Judy Wall is next to me, eyeing up the turbot and the brill. She's a regular customer who loves fish but gets out of cooking it. My husband cooks it. He's very exact and he knows when it's cooked. I plunge in further when I get called across to Atlantic Edge, a stall with rows and rows of oysters on display as a train rumbles overhead.

[Richard Stark]

We've got eight different kinds. They're from all over the uk. We've also got French ones, all different flavours.

[Liana Byrne]

We've got sea urchin. What does that taste like?

[Richard Stark]

Very sweet and creamy.

[Liana Byrne]

Killoch Bay. Is that Northern Ireland?

[Sarah Rogers]

Yeah.

[Liana Byrne]

We've got some lovely islands. That's what I like to hear. Out from under the railway viaduct, you come to an open courtyard littered with food stalls. You can't miss the sizzle of the black pig's pulled pork sandwiches, priced at the premium end. $16. Manager Taylor Wellem says the stall has grown from a small team, thanks in large part to Instagram and TikTok.

[Taylor Wellem]

So we've been here since about 2020. We've been here about two years and since then there's been massive growth. I mean, there's a team of about eight of us and now we've got about 30 plus. It does get very busy here in Borough Market. It's one of the oldest food markets in London. And also just being in the public eye, knowing that people are filming you all the time. It's cool. It's great. It's fun to be a part of.

[Liana Byrne]

Some traders aren't so comfortable with all the attention. Over at Humble Crumble, a bright pink dessert stall known for apple and cinnamon crumble, I spy a sign asking customers not to film their staff. Emily Broughton is supervising today.

[Sarah Rogers]

Most of our customer base obviously are.

[Liana Byrne]

Great, but because it is so huge on social media, everybody is filming, which is absolutely fine, but we just don't.

[Sarah Rogers]

Like to have our stuff their faces film.

[Liana Byrne]

Burr Market is a place where old traditions merge with modern tastes and where the crowds are drawn to insta fame rather than the wholesale trucks of old. I'm the BBC's Liana Byrne from Marketplace.

[Sarah Rogers]

Well, we'll have more from that series tomorrow, but for today, that's it for the Marketplace Morning Report. From the BBC World Service in the uk, I'm Sarah Rogers.

[Jannelli Espinal]

If there's one thing we know about social media, it's that misinformation is everywhere, especially when it comes to personal finance. Financially Inclined from Marketplace is a podcast you can trust to help you get serious about your money so you can build a life you've always dreamed of. I'm the host, Jannelli Espinal, and each week I ask experts important money questions, like how to negotiate job offers, how to choose a college that you can afford, and how to talk about money with friends and family. Listen to Financially Inclined wherever you get your podcasts.