The fall of the Berlin Wall in 1989 marked the symbolic end of the Cold War. But it was an economic not a military victory – a realisation in the Soviet Union that communism could never bring the same economic advancement as capitalism. The following three decades witnessed the fastest pace of globalisation since the “hundred years’ peace” of 1815-1914 and the proclamation of a unipolar “new world order” led by the United States. It also began a 30-year bear market in European defence stocks. But geopolitical events have now changed course which has significant yet underappreciated implications for investors. Without its historic adversary – the Warsaw Pact was officially dissolved in 1991 – Nato suffered a crisis of identity, leading to the axing of defence budgets and an economic “peace dividend”. From 1950 to 1989, the UK, France and Germany spent 5.5pc, 3.6pc and 3.2pc of GDP respectively on defence, compared to just 2.4pc, 2pc and 1.3pc since. In absolute terms, in 2022, British and French annual military spending was only slightly more (in 2021 dollar terms) as in 1989. Germany spent slightly less. At the time of the Suez Crisis in 1956, the UK was spending 7.6pc of...