UK economy gains from increased defence spending

Photo courtesy of BAE Systems

Working people across the UK are set to benefit from the Government’s record investment in defence, according to new figures published by the Ministry of Defence (MoD) for the 2024/25 financial year. The data reveals a 6% real-terms increase in MoD expenditure, bringing total spending to £31.7 billion. This marks the highest level of defence investment in UK industry for over a decade.

A significant portion of this uplift is directed at the Weapons and Ammunition sector, which has seen a 21% increase in investment after inflation. The MoD says this will ensure the UK remains resilient and responsive in an increasingly unstable global environment.

The figures underline the Government’s commitment to making defence an engine for economic growth. Increased investment is creating jobs and opportunities in communities nationwide, raising living standards and putting more money in the pockets of working people. The per capita spend now stands at £460, up from £440 the previous year.

International agreements
Regional analysis shows Yorkshire and Humber leading with a 30% rise in defence spending, followed by London at 18% and the North West at 15%. The MoD highlights that much of its global expenditure remains anchored in the UK, ensuring that taxpayer investment translates directly into British jobs, skills, and economic growth. This includes both direct payments to UK industry and indirect spending through international agreements where work is carried out domestically.

Defence Secretary John Healey said: “This record investment shows how we are making defence an engine for growth, supporting jobs and prosperity for British working people and boosting businesses across the UK. These new figures show how the defence dividend from our record investment is benefitting working people across the UK. It follows the launch of our Defence Industrial Strategy this week, which will provide the resilient industrial base that we need for the future.”

The Defence Industrial Strategy will focus on building a resilient supply chain and supporting innovation across the sector. Small and medium-size enterprises continue to benefit, with direct defence spending supporting innovation and growth in businesses throughout the UK. The MoD says this reflects its commitment to diversifying the supply chain and ensuring smaller companies can contribute to Britain’s defence capabilities while driving local economic growth.