13 Mar 25. UK Government announces major support for small and medium enterprises (SMEs) following historic commitment to increase spending on defence.
Scottish Secretary met JFD Global management and staff and hear about their work developing and supplying cutting edge submersible technology to the Royal Navy.
Mr Murray’s visit to the Renfrew company was linked to an announcement that thousands of small businesses in the UK will receive new government support to ensure they benefit from the historic decision to increase defence spending to 2.5% of GDP.
This investment will protect UK citizens from threats at home, but also create a secure and stable environment in which businesses can thrive, supporting the Government’s number one mission to deliver economic growth.
Scottish Secretary Ian Murray said: “It was a real pleasure to visit JFD in Renfrew, and to meet the team working on some of the most high tech defence technology we have. Scotland’s defence sector is amongst the best in the world. Helping to protect our own military personnel and those of our allies – while contributing to economic growth and good jobs in Scotland. The Prime Minister has been clear – we must up our game on defence. Scotland’s world class defence industry will play a big role in meeting that challenge. This new UK Government support for small and medium enterprises follows our commitment to significantly increase spending on defence to protect our own and European security. The consequence is a huge boost for Scottish businesses, workers and the economy. Driving economic growth and ensuring our national security are UK Government priorities. The skills, expertise and innovation in Scotland’s defence industry will play an increasingly crucial role in delivering our Plan for Change, and keeping our country safe. As well as being home to thousands of military personnel and major bases, defence is a key driver for renewal in Scotland, with the Ministry of Defence spending £2.14bn a year here – including £32 million with SMEs – directly supporting more than 11,000 jobs. Following the launch of the MoD’s Defence Industrial Strategy consultation, we have been ramping up engagement with industry, working in partnership to tackle shared challenges and identify opportunities to innovate. I am very proud of Scotland’s defence sector, and we will always stand up for the industry, its workforce, and the vital role it plays at home and abroad. Our new Brand Scotland campaign is building on that success and helping the sector export its world class technology around the world.”
The government announced its plans to launch a new hub to provide small and medium enterprises (SMEs) with better access to the defence supply chain and committed to set direct SME spending targets for the Ministry of Defence by June this year. This is a chance for small, often family-owned, firms to bring their innovations, their agility and their expert workforce to the task of strengthening Britain’s defences. It will help create new jobs, boosting the economy of small towns and suburbs in the UK. It follows the Government’s historic uplift in defence spending to 2.5% of GDP by April 2027, with a commitment to hit 3% in the next Parliament. This investment in defence will deliver the stability that underpins economic growth, and will unlock prosperity through new jobs, improving the lives of people in every corner of the UK. The new hub and investment targets announced today will ensure this increased spending directly benefits SMEs as much as possible – supporting jobs, growth and innovation. This is a vote of confidence in the prospects of up to 12,000 SMEs, supporting them to raise finance and train workers with confidence. It marks further progress to deliver the government’s Plan for Change, putting more money in people’s pockets and rebuilding Britain. The move is designed to boost the resilience of the UK’s defence industrial base and to seize the full power of rapid technological change as part of the Government’s forthcoming Defence Industrial Strategy. Nearly 70% of defence spending goes to businesses outside London and the South East, bolstering local economies from Scotland to the North West. However, only 4% of this spending went to SMEs in 2023-2024, which is why the Government is stepping up to provide more support to SMEs and help them get their foot in the door in the defence supply chain.
Prime Minister Keir Starmer said: “The UK’s defence industry is a source of national pride. It supports hundreds of thousands of good jobs up and down the country and represents British manufacturing at its best. Increasing our investment in defence is not only bolstering our national security, it is an opportunity to put more money into working people’s pockets and boost economic growth. By helping smaller businesses to access this money, we’re making communities across the UK better off and opening up more opportunities to train for good, skilled, productive jobs.”
Defence Secretary John Healey MP said: “This Government’s historic increase in defence spending to 2.5% of GDP by April 2027 will boost national security and make defence an engine for economic growth throughout the UK. For too long small businesses felt locked out of defence, but we’ve listened and we’re acting. Today’s announcement will ensure that smaller firms benefit from increased defence spending, attracting new suppliers and fast-tracking the technologies of the future into the hands of our Armed Forces. This a new era for defence and we will ensure it plays the fullest part in our national economic growth. The new Hub will work with suppliers across the nations and regions of the UK to ensure that it fully meets their needs. This will strengthen defence procurement through increased choice and faster access to innovation. It will keep the UK at the forefront of defence technology, improving the capabilities available to our Armed Forces, the competitiveness of UK industry and growing potential exports benefits.”
Defence is an engine for jobs and growth in every nation and region of the UK. In 2023-24, defence spending by the Government supported over 430,000 jobs across the UK, the equivalent to one in every 60. In the same year, the Ministry of Defence spent a total of £28.8bn with UK industry, with spending in the East Midlands increasing by 30%, equivalent to £328m, on the previous year. Northern Ireland also saw a rise of 20%, with other increases in Yorkshire and the Humber and the North West, up 19% and 18% respectively. With increased support for SMEs and the upcoming Defence Industrial Strategy, the Government plans to increase this further.
14 Mar 25. £2 billion boost for defence sector to unlock orders from allies
Further support for the defence industry is being set out by the Chancellor with billions of pounds unlocked for UK defence companies that export overseas.
- UK defence exporters to benefit from £2 billion increase to UK Export Finance lending capacity, boosting growth and securing jobs in a priority sector.
- Pipeline of UK orders for UK exporters unblocked, bolstering the supply chain and increasing our competitiveness in defence industry.
- Demonstrates the UK’s commitment to bolstering the defence industry, vital to UK national security – the first duty of any government – and growth; both central to the Plan for Change.
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 Rachel Reeves will announce a £2bn 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 £8bn to £10bn, 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 £1.6bn 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 Rachel Reeves 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 Jonathan Reynolds 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.”
Defence Secretary, John Healey, said: “A strong UK defence industrial base is essential for our national security, enabling us to rearm and innovate at a wartime pace. British businesses will directly benefit from this increase in lending capacity alongside our historic decision to raise defence spending to 2.5% of GDP – the largest uplift since the end of the Cold War. This will make our country more secure and ensure the defence sector is an engine for growth in every region and nation of the UK.”
Scottish Secretary Ian Murray 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 £2.14bn in UK Government spending in 2023/24, equating to about £390 per person, supporting approximately 25,600 jobs.
Chris Allam, Managing Director for MBDA UK, said: “UK Export Finance lending has and will continue to be a vital tool for Government and the defence industry. Increasing its capacity will enable MBDA, as the UK’s sovereign complex weapons provider, to secure more opportunities to deliver strategic capabilities to the UK’s key allies. It strengthens relationships with partners and makes the UK competitive in a global marketplace.”
(Source: https://www.gov.uk/)