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Rachel Reeves confirmed an extra £2.2 billion £2.2 billion in British military funds next year as she set up plans to make the UK a “defense industry superpower,” including a new growth committee to boost the UK.
Defence formed a central theme in the Spring Statement as the Prime Minister not only presented challenges for the UK, but also opportunities for employment and revitalization across the country.
Reeves announced an additional £2.2 billion for the Ministry of Defense in 2025-26. She frames the Kiel Star Proposal pledge to increase from April 2027 to 2.5% of current GDP from 2.3% to 2.5%.
This increase comes as US President Donald Trump undermines the security guarantees that Washington has expanded to Europe since World War II.
Starting next month, 10% of mod kit budgets will ring out for investments in emerging technologies, including drones and systems, made possible by artificial intelligence.
It is designed to enhance advanced manufacturing production in places like Glasgow, Derby, Newport and other locations, creating openings for skilled engineers and homemade startups.
The region is already an important site for some of the UK’s biggest defence players, including BAE Systems, Rolls-Royce and Airbus.
Rachel Reeves announced that 10% of mod kit budgets will be ring fenced to invest in emerging technologies such as drones © James Skerrett/UK Mod/Crown Copyright
Reeves added: “We are given a clear obligation to bring innovative technology to the forefront.”
Kevin Craven, chief executive of industry trade advertising, said the funding package is “the first step in a long-term approach to industry engagement, demand signals and potential supply to national security.”
Meanwhile, British Defense Secretaries John Healy and Reeves will co-chair a new Defense Growth Committee to “center” the government’s future industrial strategy, she said.
The board will oversee work by Heale that has already begun to fix mod “broken” sourcing systems, streamline accessibility and improve accessibility for small businesses competing for government contracts.
In the future, mods will take a new “segmented” approach to procurement along with relevant targets to improve delivery timescales, Reeves said.
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She highlighted this month the government’s announcement that it is offering an increase in the capacity of UK export finance to enable loans to overseas buyers of UK defence goods and services to capitalize on the rise in military spending across Europe and beyond.
Hotspots in the defense industry, including Belfast, Teesside, Plymouth and Rossis, will benefit from fresh work and “new confidence,” Reeves said.
She also identified Plymouth Naval Base as a target for regeneration, highlighting a previously announced £200 million investment in Barrow-in-Furness.
The industry has welcomed new investments in defense, but the pace of international aid budget cuts has sparked anger among campaigners. A spring statement said funding will begin to decline from next year, cutting £200 million between 2025 and 26.
“We’re looking forward to seeing the company’s efforts to create a new and affordable environment,” said Romily Greenhill, CEO of Bond, a network of British development NGOs. “By choosing to hurry up these cuts, the UK is turning its back on the poorest and marginalized people in the world.
