Further support for the defence industry is being set out by the
Chancellor today which will see billions of pounds unlocked for
UK defence companies that export overseas, driving economic
growth and creating jobs across the UK.
On a visit to Scotland today (14 March), will announce a £2 billion
increase to UK Export Finance's Direct Lending capacity for
defence, which will unlock further opportunities for UK defence
exports such as missiles, aircraft and armoured vehicles
overseas.
The uplift, which will increase UKEF's lending capacity from £8
billion to £10 billion, will increase the competitiveness of this
country's defence industry, allowing UK exporters to grow their
business through sales to our allies around the world, and
bolstering supply chains.
UKEF's Direct Lending facility provides loans to other
governments to buy goods and services from the UK. In
2023/24, UKEF issued £8.8 billion worth of loans, guarantees and
insurance to help grow UK exports, supporting 650 exporters of
all sizes and 41,000 jobs across the UK.
This builds on UKEF's strong record of support for the defence
sector, which has recently included an £8.8bn guarantee for
exports of air defence systems to Poland, support for the export
of Typhoon aircraft to Qatar and support for the sale of ex-Royal
Navy minehunting vessels to the Ukrainian Navy.
Today's news follows the recent £1.6 billion commitment announced
by the Prime Minister to supply thousands of advanced air defence
missiles to Ukraine, boosting the UK economy and support 700
existing jobs at Thales in
Belfast.
This uplift will drive tangible increases in financial support
for UK defence exporters by increasing the funding available for
overseas buyers of UK defence goods and services, and is a
central pillar of the government's upcoming Defence Industrial
Strategy.
As set out in the Plan for Change, national security is the first
duty of the government. In recent years, the world has been
reshaped by global instability, including Russian aggression in
Ukraine, increasing threats from malign actors, rapid
technological change, and the accelerating impacts of climate
change.
Today's announcement is part of how the UK is stepping up to meet
this generational challenge.
Chancellor of the Exchequer said:
“The world is changing, and we must bring about a new era of
security and renewal that protects working people and keeps our
country safe. This increase to UKEF's lending capability is our
Industrial Strategy in action, bolstering our defence industry
and supply chains, creating jobs and driving growth across the
UK.
“This is alongside an increase in our defence spending to
2.5% of GDP. We are strengthening our national defence,
kickstarting economic growth and delivering the stability we need
to keep us safe.
Business Secretary said:
“A strong defence sector is vital for a Britain that's both
secure at home and strong abroad, and ensures a world where
business can benefit from the economic security it brings.
“That's why our Plan for Change has put
defence at the heart of our Industrial Strategy, helping us drive
growth while bolstering our national security for the long
term.
“This new UKEF lending capability strengthens
our support for the sector even further, and will help our
defence firms export the best of British expertise abroad while
boosting jobs and growth at home.”
Scottish Secretary said:
"We are entering a new era for our national defence and
Scotland's world class defence industry is playing a big role in
meeting that global security challenge. Scottish defence
businesses – with their skills, expertise and innovation – have a
huge opportunity to benefit from this £2 billion in new
lending.
“That will mean a boost in skilled jobs and
economic growth in Scotland and show the best of our world class
industry abroad."
Whilst in Scotland the Chancellor will visit a defence company,
following the government's commitment to increase spending on
defence to 2.5% of GDP from April 2027, in recognition that the
UK faces a period of profound change, with conflicts overseas
undermining security and prosperity at home.
This is alongside an ambition to spend 3% of GDP on defence in
the next parliament, as economic and fiscal conditions allow, in
order to keep the British people safe and secure for generations
to come.
Scotland is a hub for the UK defence industry, home to companies
such as Babcock and BAE Systems, and critical operations in
Scotland have benefitted historically from UKEF support through
guarantees for their international exports to global markets.
UKEF have previously supported Babcock with a £192m loan
guarantee to finance the sale of two mine counter measure vessels
to the Government of Ukraine.
Scotland's defence sector received £2.14 billion in UK Government
spending in 2023/24, equating to about £390 per person,
supporting approximately 25,600 jobs.
