What Britain needed from the Spring Statement was concrete steps towards boosting its defence capabilities. There’s room for improvement, and we await the Strategic Defence Review led by former Secretary General of NATO and Labour Defence Secretary Lord Robertson with even greater interest. The confirmation that defence spending will rise to 2.5% of GDP by 2027, plus a new £400 million Defence Innovation Fund, and the dedication of 10% of the Ministry of Defence’s (MoD) equipment budget to novel technologies showed that defence is high on the Government’s priority list, and rightly so. Almost gone are the days when the industry and investment into it were seen as “taboo”. However, we have to ask ourselves: are these welcome changes enough to establish the UK as a defence industrial superpower? Is the timeframe sufficient? Has one even been established, apart from the GDP commitment?
Money talks, but so does speed
The UK has committed to the biggest sustained increase in defence spending since the end of the Cold War. While 2.5% of UK GDP is significant, the figure is still inadequate compared with the resources of other global powers such as the US or russia. There is a vast chasm between the UK and US defence spend in monetary terms – with $967.96 billion of American investment while russia ploughed $145.9 billion and almost a tenth of its GDP into the military even as its economy fails. Germany, despite its more conservative GDP commitments, spent $85.97 billion in 2024 compared to the UK’s $81.06 billion. Not only is the budget less than many allies and our collective adversaries, we only have a timeline for the spending in relation to GDP to come into effect. Even still, two years from now is not fast enough. Making sure that we do and that the implementation lead time is realistic is essential for both Britain’s national interests and Ukraine’s war effort. The Chancellor needs to outline when the Defence Innovation Fund will be up and running and how soon we’ll see a portion of the MoD’s equipment budget redirected to new technologies. Unsurprisingly, the sooner, the better..
It has become apparent that the UK has to focus on achieving more with less in the immediate future. The effective allocation of limited defence resources will be crucial, ensuring that this additional funding does not disappear into primes but fulfils its intended purpose. These large, established companies that have contracts with governmental departments, such as the MoD, swallowed 96% of the defence budget in 2023-24. The US has long since recognised the importance of allocating capital to small defence businesses with a stipulation that 25% of Department of Defense contracts go to SMEs, a figure it typically exceeds. Startups will be key to unlocking sovereign defence capabilities and maintaining national security....