Defence Online

The UK Government has announced a £2Bn increase in lending capacity to support UK defence exports, unlocking new opportunities for businesses and strengthening the country’s defence industry.

Chancellor Rachel Reeves unveiled the plan during a visit to Scotland, confirming that UK Export Finance (UKEF) will expand its Direct Lending capacity from £8Bn to £10Bn. This will enable UK defence companies to secure more international contracts, bolstering supply chains and enhancing competitiveness in global markets.

Strengthening the UK’s Defence Industry

The funding increase will allow UK defence firms to expand exports of key assets such as missiles, aircraft, and armoured vehicles, ensuring they remain a preferred supplier for allied nations.

UKEF’s Direct Lending facility provides loans to foreign governments to purchase British-made defence equipment. In 2023-24 alone, UKEF issued £8.8Bn in loans, guarantees, and insurance, supporting 650 UK exporters and 41,000 jobs nationwide.

Recent UKEF-backed defence deals include:

• An £8.8Bn guarantee for air defence system exports to Poland.
• Support for the export of Typhoon aircraft to Qatar.
• Financing for the sale of ex-Royal Navy minehunting vessels to Ukraine.

The announcement follows the UK’s £1.6Bn commitment to supply thousands of advanced air defence missiles to Ukraine, a move that supports 700 jobs at Thales in Belfast and strengthens the UK’s role in global security.

Government: Defence Investment is Key to Economic Growth

The funding boost aligns with the government’s Plan for Change, which prioritizes both national security and economic growth.

Chancellor Rachel Reeves emphasised the significance of the investment: “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 investment in UK defence exports strengthens supply chains, supports jobs, and drives economic growth across the UK.”

Defence as an Engine for Growth

The UK Government’s increased defence spending—rising to 2.5% of GDP by 2027 with an ambition to reach 3% in the next Parliament—is expected to:
Enhance national security in a time of rising global threats.
Boost industrial growth by securing new international defence contracts.
Create skilled jobs in every region of the UK, including Scotland, the North West, and Yorkshire.

Industry Leaders Welcome the Investment

John Howie, Chief Corporate Affairs Officer at Babcock: “The UK’s defence industry plays a vital role in national security and is a major contributor to the economy. At Babcock Rosyth, we are proud to be delivering five new Type 31 frigates for the Royal Navy, with this sovereign capability already being exported to Poland and Indonesia.”

Chris Allam, Managing Director for MBDA UK: “UKEF lending is a critical tool for securing international defence contracts. Increasing its capacity will help us deliver strategic capabilities to the UK’s key allies and strengthen our competitiveness in the global marketplace.”

A New Era for UK Defence Exports

With defence exports playing an increasingly vital role in national security and economic prosperity, the UK Government’s expanded UKEF lending will help British defence firms secure more international deals, create high-skilled jobs, and position the UK as a global leader in defence technology.

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