What's Happening?
The UK Ministry of Defence (MoD) has awarded contracts to non-UK companies that are, on average, 23.1% higher in value compared to those awarded to UK-based firms. Between July 2024 and June 2025, the MoD awarded 1,244 contracts worth £17 billion to UK suppliers, while 174 contracts worth £3 billion were given to non-UK suppliers. The average contract value for non-UK companies was slightly over £17.2 million, compared to just over £13.6 million for UK companies. This disparity highlights the reliance on international expertise, particularly in the land domain, where UK capabilities are limited.
Why It's Important?
The higher average contract awards to non-UK firms underscore the challenges faced by the UK's defence industrial base, particularly in delivering complex items. This reliance on foreign expertise could impact the UK's ability to maintain and develop its defence capabilities independently. The situation also reflects broader economic strategies, as the UK government aims to leverage the defence sector for economic growth. However, the reliance on non-UK firms may limit the potential benefits of increased defence spending on domestic job creation and industrial development.
What's Next?
The UK government may need to address the capability gaps within its defence industrial base to reduce reliance on foreign expertise. This could involve investing in domestic industries and fostering innovation to enhance self-sufficiency in defence production. Additionally, the government's plan to increase defence spending to 5% of GDP over the next decade may influence future contract awards and industrial strategies. Stakeholders, including policymakers and industry leaders, will likely engage in discussions to balance economic growth objectives with national security interests.
