Despite a lukewarm reaction from industry regarding yesterday’s Budget announcement one area of manufacturing that could see further potential growth is the defence sector.
The Government has confirmed that funding for its £298 billion Defence Investment Plan, will provide a significant boost for UK defence manufacturing and the wider industrial supply chain.
The package closes a previously identified £4.7 billion funding gap and secures the full £15 billion increase in defence investment intended to support the delivery of the UK's strategic defence objectives.
For British manufacturers, the move is expected to create opportunities across a broad range of sectors, including precision engineering, aerospace, vehicle production, naval infrastructure, advanced materials, autonomous systems and defence technology.
With the Government prioritising sovereign capability and greater operational readiness, suppliers throughout the defence supply chain could benefit from increased procurement activity and long-term investment programmes over the remainder of the decade.
The Budget also outlined a series of further measures designed to strengthen the UK's long-term defence industrial base. These include up to £5 billion of investment through the National Wealth Fund to support defence, dual-use technologies and sovereign capability projects, alongside the creation of an Innovative Defence Financing Taskforce aimed at attracting greater private-sector investment into the sector.
The Government also announced plans to negotiate a joint defence investment and procurement mechanism with Finland, Poland and the Netherlands, potentially opening new collaborative opportunities for UK manufacturers and suppliers operating in international defence programmes.
Looking further ahead, ministers confirmed that details of how the UK will increase defence spending to 3% of GDP by 2030, rising to 3.5% by 2035 under NATO commitments, will be set out at next year's Spending Review.
Jim Ribeiro, partner and patent attorney at intellectual property law firm,
Withers & Rogers, commenting on the announcements said: “The Chancellor confirmed that Government’s Defence Investment Plan is fully funded and announced a further £10bn of additional financial support for Ukraine. The Government is also targeting defence spending of 3% of GDP by 2030, en route to its NATO commitment of 3.5% by 2035.
These commitments underline the importance of national security and resilience at a time of heightened geopolitical risk.
“There’s positive news for innovators in the sector, with the creation of a new Innovative Defence Financing Taskforce and the Chancellor also confirmed that the National Wealth Fund and British Business Bank will deploy up to £5 billion over the next four years into defence, dual-use and other sectors supporting national security, sovereign capability and resilience.
“For the growing number of innovative, technology-led businesses in the sector, greater access to finance should help support investment and growth. Protecting the intellectual property generated by that investment will also be critical if those businesses are to maximise its commercial value while safeguarding strategically important technology.
“The UK is a world leader in defence, with significant expertise spanning areas such as drone technology, cybersecurity, electronic surveillance and AI. Innovators in the sector rely on funding to support their growth plans and to protect knowledge that is critical to UK defence capability and is therefore a matter of national security.”