£2 billion increase in UK Export Finance (UKEF) defence sector lending capacity The move will strengthen supply chains, create jobs and make UK defence exports more competitive globally. This funding will allow British defence companies to grow internationally, win more contracts and bolster national security.
Bolstering the UK Defence Industry
The funding boost was revealed by Chancellor Rachel Reeves on a visit to Scotland, where she said the increase underpinned the government's ambition to support UK defence manufacturers. This extra £2 billion increases UKEF’s Direct Lending limit from £8 billion to £10 billion, helping UK businesses exporting important defence equipment, including:
⦁ Missiles
⦁ Aircraft
⦁ Armoured vehicles
This initiative, by making access to financing easier, ensures UK defence firms can compete more effectively for contracts with allied nations, securing long-term economic stability.
Effects on Supply Chains, Jobs and Salaries
This funding boost will release a rich pipeline of UK Orders, enabling UK defence manufacturers to continue to flourish. But by doing so with even more export deals, British defence companies are able to reinvest into their own supply chains, growing their operations and creating high-skilled jobs throughout the country.
UKEF’s support has already made a real difference to the defence sector, such as:
⦁ An £8.8 billion export guarantee for Poland’s air defence systems.
⦁ Financing for the sale of Typhoon jets to Qatar
⦁ Equipment to support the Ukrainian Navy with ex-Royal Navy minehunting vessels.
An expansion of UKEF’s lending capacity will build on this success, meaning more British defence firms can export their products and services to important allied partners.
An Investment in National Security
The government’s Plan for Change (4) details the importance of defence for security and as a driver of economic growth. As global threats change, the UK must and does need to improve its industrial capacity, but also be a professional and reliable security partner for nations that work with her.
This increase in funding is part of wider efforts to modernise the UK’s defence industry — which is made up of:
⦁ Increasing defence spending to 2.5% of GDP by April 2027.
⦁ Looking to uplift defence spending to 3% in the next parliamentary term.
⦁ Addressing Ukraine's needs with £1.6 billion of advanced air defence missiles, protecting 700 jobs at Thales in Belfast.
Defence Secretary John Healey said this investment has made a real difference:
“We need a strong UK defence industrial base for our national security, providing the ability to rearm and innovate at wartime tempo. “This increase in lending capacity will ensure British businesses will have direct access to support, and will help make the defence sector an engine for growth in each region of the UK.”
Scotland’s Strategic Role in Defence Exports
Scotland is a key centre of the UK’s defence industry, hosting prominent firms like Babcock and BAE Systems. The UK government spent £2.14 billion on Scotland’s defence sector in 2023/24, sustaining approximately 25,600 jobs.
Scottish secretary Ian Murray also highlighted the economic benefits of this funding increase:
Top Scottish defence businesses – with their skills, expertise and innovation – have a golden opportunity to tap into this £2 billion of new lending. That means more highly-skilled jobs and stronger economic growth in Scotland.”
UK Export Finance has previously provided support for Scottish defence firms, including –
⦁ A £192 million loan guarantee to Babcock to provide two mine countermeasure vessels to Ukraine.
⦁ Funding linked to international defence contracts secured by Scottish-based manufacturers.
⦁ These investments showcase the contribution that Scotland’s defence industry makes to the UK’s status as a global defence leader.
⦁ Investment Welcomed by Industry Leaders
⦁ Prominent defence industry leaders have welcomed the government boost.
John Howie, Babcock's Chief Corporate Affairs Officer added,
“Our defence industry is critical to the security and defence of the UK, and makes an enormous contribution to the Scottish economy. “At Rosyth, we at Babcock are immensely proud to be delivering five new Type 31 frigates for the Royal Navy, a programme which has already seen success in both Poland and Indonesia.”
Chris Allam, Managing Director of MBDA UK said the importance for UK defence exports was clear:
“UK Export Finance lending has and will continue to be a vital tool for government and the defence industry. Increasing its capacity will allow MBDA, as the UK’s complex weapons provider, to seize further opportunities in delivering strategic capabilities to the UK’s important partners. It enhances partnerships with allies and makes the U.K. competitive in a global market place.”
The United Kingdom’s Long-Term Defence Strategy
The UK government is investing in long term security—keeping people safe, securing borders and tackling threats while driving economic growth as the world grows more geopolitically unstable. Increasing UKEF’s lending capacity will increase the ability of British defence companies to win international contracts and increase their competitiveness in global markets.
Buffeted by the government’s ambition to grow defence spending as well in line with its overarching plan to create a UK that’s top dog in defence technology and manufacturing. So, by finding new deals and shoring up supply chains, the UK can support allies at the same time as driving growth here at home.
Bolstering the UK Defence Industry
The funding boost was revealed by Chancellor Rachel Reeves on a visit to Scotland, where she said the increase underpinned the government's ambition to support UK defence manufacturers. This extra £2 billion increases UKEF’s Direct Lending limit from £8 billion to £10 billion, helping UK businesses exporting important defence equipment, including:
⦁ Missiles
⦁ Aircraft
⦁ Armoured vehicles
This initiative, by making access to financing easier, ensures UK defence firms can compete more effectively for contracts with allied nations, securing long-term economic stability.
Effects on Supply Chains, Jobs and Salaries
This funding boost will release a rich pipeline of UK Orders, enabling UK defence manufacturers to continue to flourish. But by doing so with even more export deals, British defence companies are able to reinvest into their own supply chains, growing their operations and creating high-skilled jobs throughout the country.
UKEF’s support has already made a real difference to the defence sector, such as:
⦁ An £8.8 billion export guarantee for Poland’s air defence systems.
⦁ Financing for the sale of Typhoon jets to Qatar
⦁ Equipment to support the Ukrainian Navy with ex-Royal Navy minehunting vessels.
An expansion of UKEF’s lending capacity will build on this success, meaning more British defence firms can export their products and services to important allied partners.
An Investment in National Security
The government’s Plan for Change (4) details the importance of defence for security and as a driver of economic growth. As global threats change, the UK must and does need to improve its industrial capacity, but also be a professional and reliable security partner for nations that work with her.
This increase in funding is part of wider efforts to modernise the UK’s defence industry — which is made up of:
⦁ Increasing defence spending to 2.5% of GDP by April 2027.
⦁ Looking to uplift defence spending to 3% in the next parliamentary term.
⦁ Addressing Ukraine's needs with £1.6 billion of advanced air defence missiles, protecting 700 jobs at Thales in Belfast.
Defence Secretary John Healey said this investment has made a real difference:
“We need a strong UK defence industrial base for our national security, providing the ability to rearm and innovate at wartime tempo. “This increase in lending capacity will ensure British businesses will have direct access to support, and will help make the defence sector an engine for growth in each region of the UK.”
Scotland’s Strategic Role in Defence Exports
Scotland is a key centre of the UK’s defence industry, hosting prominent firms like Babcock and BAE Systems. The UK government spent £2.14 billion on Scotland’s defence sector in 2023/24, sustaining approximately 25,600 jobs.
Scottish secretary Ian Murray also highlighted the economic benefits of this funding increase:
Top Scottish defence businesses – with their skills, expertise and innovation – have a golden opportunity to tap into this £2 billion of new lending. That means more highly-skilled jobs and stronger economic growth in Scotland.”
UK Export Finance has previously provided support for Scottish defence firms, including –
⦁ A £192 million loan guarantee to Babcock to provide two mine countermeasure vessels to Ukraine.
⦁ Funding linked to international defence contracts secured by Scottish-based manufacturers.
⦁ These investments showcase the contribution that Scotland’s defence industry makes to the UK’s status as a global defence leader.
⦁ Investment Welcomed by Industry Leaders
⦁ Prominent defence industry leaders have welcomed the government boost.
John Howie, Babcock's Chief Corporate Affairs Officer added,
“Our defence industry is critical to the security and defence of the UK, and makes an enormous contribution to the Scottish economy. “At Rosyth, we at Babcock are immensely proud to be delivering five new Type 31 frigates for the Royal Navy, a programme which has already seen success in both Poland and Indonesia.”
Chris Allam, Managing Director of MBDA UK said the importance for UK defence exports was clear:
“UK Export Finance lending has and will continue to be a vital tool for government and the defence industry. Increasing its capacity will allow MBDA, as the UK’s complex weapons provider, to seize further opportunities in delivering strategic capabilities to the UK’s important partners. It enhances partnerships with allies and makes the U.K. competitive in a global market place.”
The United Kingdom’s Long-Term Defence Strategy
The UK government is investing in long term security—keeping people safe, securing borders and tackling threats while driving economic growth as the world grows more geopolitically unstable. Increasing UKEF’s lending capacity will increase the ability of British defence companies to win international contracts and increase their competitiveness in global markets.
Buffeted by the government’s ambition to grow defence spending as well in line with its overarching plan to create a UK that’s top dog in defence technology and manufacturing. So, by finding new deals and shoring up supply chains, the UK can support allies at the same time as driving growth here at home.
