Unlocking the Full Value of UK Defence Spending
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  • In a world of increased geopolitical uncertainty, resource constraints, and rapid technological development, more than ever before, the UK needs a focused, coherent, and unified national defence industrial strategy that unlocks the full value of its defence spending.
  • Defence investment can be a powerful contributor to raising the UK’s economic growth rate—each £1 billion of defence spending generates £2.2 billion of gross output and approximately 15,000 jobs.
  • Achieving these benefits will require an updated approach, with an overhaul of how the UK approaches procurement, secures its supply chains, and enhances the value and competitiveness of its industrial base.

As with many across the West, the UK’s defence budget as a proportion of GDP has fallen steadily since the 1950s, from 7.4% to a low of 2.2% in 2018. Of the 2022–23 UK defence budget of approximately £53 billion, capital costs, including acquisition of arms, accounted for 35% of the budget, service and civilian personnel 23%, and equipment support 15%.

In a world of increased geopolitical uncertainty, government resource constraints, and rapid technological development, there is a need to maximise the benefits that the UK can achieve from its defence spending. The opportunity is significant, given the increasingly critical security and economic outcomes at stake. While the 2023 Integrated Defence Review and 2021 Defence Industry Policy provide a strong starting point from where to proceed, the UK has yet to fully articulate an overarching, integrated plan to fully capture its desired strategic outcomes.

An updated approach can unlock the full value of the UK’s available defence budget; the critical questions are where to invest, how to optimise defence spending, and how to implement effectively and at pace.

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