Plans to boost UK defence will have knock-on effects

Those commitments followed last week’s publication of the strategic defence review which warned of the threat the UK and its allies face from “other states with advanced military forces” and a need for “a shift in approach” in relation to the UK’s response to the changing international security environment.

Currently, 2.3 per cent of UK GDP is spent on defence, but that is set to increase to 2.5 per cent by 2027 under UK government plans that envisage a further increase to 3 per cent of GDP by 2034 - but only if economic conditions allow.

More details of how the government intends to spend the additional budget emerged as it responded to the outcomes of the strategic defence review which was commissioned shortly after Labour came to power last summer. Former Nato secretary general Lord Robertson, who earlier served as defence secretary under the UK government led by Tony Blair in the late 1990s, led the review.

The review found that while the UK military already has “innumerable strengths”, it said more must be done to better prepare the armed forces for war and to deter would-be aggressors. In this regard, it called for the UK to develop a more integrated force, where data and new technologies are developed and harnessed to complement military personnel and hardware.

The government endorsed all 62 recommendations from the review and, among other things, confirmed plans to invest in at least six new munitions factories across the UK, build up to 12 new submarines, develop a “sovereign warhead programme”, and facilitate manufacturing of drones and other cutting edge defence technologies.

Starmer said the review delivers “a blueprint to make Britain safer and stronger: a battle-ready, armour-clad nation - with the strongest alliances and the most advanced capabilities - equipped for the decades to come”. He promised that the investment that will follow will drive job creation and growth across the UK.

“We’re going to build,” Starmer said. “We’re going to use this investment - and this once-in-a-generation reform - to drive renewal up and down the nation, creating new jobs, creating skills and opportunity, driving huge growth in industrial capacity.”

The defence review aligns with similar policy developments under consideration across the EU and among other Nato members. Alongside government funding, increased investment from funds and private finance will support the growth of industries contributing to the defence of the UK, Europe and beyond. Innovative technology, including cyber, will play a crucial part.

This increased investment directed at accelerating security capabilities could have a subsequent sizable and sustained positive knock-on effect to the economy. For example, some of the drone technology currently being developed will likely find civil use cases alongside its military application. The private sector will see a boost in funding, which will lead to new opportunities, as well as corporate activity, in many industries in the UK and across Europe more widely.

Andrew Brydon, Partner, Pinsent Masons​