What's Happening?
The UK government has unveiled a new Industrial Strategy and Strategic Defence Review, focusing on enhancing national security and economic growth through increased investment in the defence sector. The strategy aims to reform and reshore defence procurement, providing opportunities for manufacturing SMEs to secure new contracts. The Prime Minister has committed to raising national security spending from 2.3% to 5% of GDP by 2035, which includes 3.5% for core defence and 1.5% for resilience and security. This initiative is expected to create highly-skilled jobs and rebuild the nation's industrial base, with a significant portion of Ministry of Defence spending already supporting over 200,000 jobs across the UK.
Why It's Important?
The strategy is significant as it positions the UK to become a defence industrial superpower, potentially driving economic growth and improving productivity. By increasing spending targets and ensuring SMEs receive a larger share, the initiative aims to boost regional equality and upskill workers. The focus on defence supply chains could enhance the UK's export potential and diversify revenue streams for manufacturers. This move is crucial for maintaining national security and addressing evolving global threats, while also fostering innovation and resilience within the defence sector.
What's Next?
Manufacturers are encouraged to remain alert to the opportunities presented by the expanding defence market. Lloyds Bank is supporting UK manufacturers by providing financial solutions to develop new capabilities and expand capacity for defence contracts. Partnerships with industry bodies like MTC and Make UK are helping manufacturers access defence suppliers and SMEs. As the UK government continues to implement its strategy, the defence sector is expected to play a vital role in national security and economic growth.
