From adding a staggering £31.3 billion to the UK economy to directly employing over 108,000 people in high-skill roles, the nation’s defence industry is a powerhouse of economic activity, technological innovation, and strategic resilience that punches far above its weight.
Key Takeaways
- The UK defence sector contributed £31.3 billion to the UK economy in 2022, equivalent to 1.7% of GDP
- Defence industry GVA grew by 4.2% in 2022 compared to 1.8% for the whole UK economy
- Supply chain spending in the defence sector totalled £15.7 billion in 2022, supporting 143,000 jobs indirectly
- The UK defence industry directly employs 108,000 people in high-skill roles as of 2023
- 41,000 direct jobs in aerospace defence manufacturing in 2022
- Maritime defence sector employs 28,000 people including shipyards in 2023
- UK defence exports totalled £11.3 billion in 2022
- BAE Systems exported £7.8 billion worth of defence products in 2022
- UK ranked 5th globally for arms exports with 4.5% market share 2018-2022
- UK MOD equipment budget £18.1 billion in FY 2023/24
- Total UK defence budget £52.9 billion for 2023/24, 2.3% of GDP
- BAE Systems won £4.2 billion in MOD contracts in 2022
- Defence R&D budget £6.6 billion in 2023/24 including MOD £2.2bn
- Industry-funded defence R&D £2.8 billion in 2022
- Tempest/GCAP programme £2 billion committed to 2025
The UK defence industry is a major economic contributor, supporting hundreds of thousands of skilled jobs.
Economic Contribution
- The UK defence sector contributed £31.3 billion to the UK economy in 2022, equivalent to 1.7% of GDP
- Defence industry GVA grew by 4.2% in 2022 compared to 1.8% for the whole UK economy
- Supply chain spending in the defence sector totalled £15.7 billion in 2022, supporting 143,000 jobs indirectly
- The defence sector's multiplier effect generated an additional £8.5 billion in economic activity beyond direct spend in 2021
- Aerospace and defence manufacturing contributed £12.4 billion to UK GVA in 2022
- Maritime defence sector added £7.2 billion to GDP through shipbuilding and support services in 2022
- Defence electronics and cyber contributed £4.1 billion to economic output in 2021
- Total defence-related turnover reached £38.6 billion in 2022 across prime contractors
- Land systems defence manufacturing generated £3.9 billion in revenue in 2022
- The sector's productivity was 28% above the UK average in 2022
- Defence R&D spend by industry totalled £2.8 billion in 2022, boosting high-tech economic growth
- Indirect taxes from defence activities amounted to £6.2 billion in 2022
- Defence sector supported 1 in 200 UK jobs with £1.7 billion in wages in 2022
- Export multipliers added £4.3 billion to GDP from defence exports in 2021
- Security and resilience services contributed £2.9 billion to economy in 2022
- Defence training and simulation market valued at £1.8 billion GVA in 2022
- Ammunition and munitions production added £1.2 billion to UK economy in 2022
- C4ISR systems generated £3.5 billion economic impact in 2022
- Defence logistics services contributed £4.7 billion to GDP in 2021
- Unmanned systems sector added £1.1 billion GVA in 2022
- Defence ICT spend drove £2.4 billion in economic activity in 2022
- Weapon systems manufacturing turnover hit £9.8 billion in 2022
- Protective equipment production contributed £0.9 billion to economy in 2022
- Defence engineering services generated £5.6 billion GVA in 2022
- Satellite and space defence added £1.4 billion to GDP in 2022
- Maintenance, repair and overhaul (MRO) sector valued at £6.3 billion in 2022
- Defence consulting and advisory services contributed £1.7 billion in 2022
- Testing and evaluation services added £2.1 billion GVA in 2022
- Defence facilities management generated £3.2 billion economic output in 2022
- Overall defence sector balance of payments surplus was £7.4 billion in 2022
Economic Contribution Interpretation
While it may seem paradoxical, the UK's defence industry proves itself to be a remarkably productive and multi-faceted economic engine, not just a necessary expense, as it contributes tens of billions across a dizzying array of high-tech sectors, supports vast supply chains, and even manages a healthy trade surplus, all while being nearly a third more productive than the national average.
Employment and Skills
- The UK defence industry directly employs 108,000 people in high-skill roles as of 2023
- 41,000 direct jobs in aerospace defence manufacturing in 2022
- Maritime defence sector employs 28,000 people including shipyards in 2023
- Electronics, sensors and cyber defence jobs total 22,500 in 2022
- Land and weapons systems employ 12,300 skilled workers in 2023
- Security and resilience sector has 15,400 employees in UK in 2022
- Defence supply chain supports 248,000 indirect and induced jobs in 2023
- 7% of UK engineering graduates enter defence sector annually
- Women represent 18% of defence industry workforce in 2023, up from 15% in 2019
- STEM skills shortage affects 35% of defence firms in 2023 survey
- Apprenticeships in defence reached 12,000 active in 2022
- Average salary in defence sector is £48,200, 22% above UK average in 2022
- 4,500 cyber specialists employed in defence industry in 2023
- Software engineers in defence number 18,000 with 10% annual growth
- Project managers in defence projects: 9,200 roles in 2022
- Welders and fabricators: 8,100 in shipbuilding defence in 2023
- Electrical engineers: 11,400 across defence platforms in 2022
- Data scientists and analysts: 6,200 in defence AI/ML in 2023
- Logistics specialists: 14,500 employed in defence supply chain 2022
- 25% of workforce aged over 50, prompting skills retention focus in 2023
- Diversity: 12% BAME representation in defence jobs in 2023
- Training spend per employee: £2,800 annually in defence sector 2022
- Veterans employed: 15% of defence workforce in 2023
- Digital skills roles grew 15% to 25,000 in 2022-2023
- Quality assurance engineers: 7,800 positions in 2023
- R&D engineers: 16,200 dedicated roles in industry 2022
- Manufacturing technicians: 32,000 in defence production 2023
- Systems integrators: 10,500 specialists in 2022
- HR and recruitment in defence: 4,200 roles supporting sector 2023
Employment and Skills Interpretation
While the UK defence industry skillfully deploys over a quarter of a million minds to build everything from cyber firewalls to steel hulls, its real strategic vulnerability appears to be a looming battle on the home front against an aging workforce, a persistent STEM shortage, and a painfully slow march toward diversity.
Export Performance
- UK defence exports totalled £11.3 billion in 2022
- BAE Systems exported £7.8 billion worth of defence products in 2022
- UK ranked 5th globally for arms exports with 4.5% market share 2018-2022
- Middle East received 52% of UK defence exports in 2022
- Air sector exports: £4.2 billion in 2022 including Typhoon jets
- Naval exports: £2.1 billion from Type 26/31 frigates in 2022 deals
- Land vehicles exports: £1.3 billion led by Boxer and Ajax in 2022
- Electronics exports: £1.8 billion including radars and comms in 2022
- Saudi Arabia was top destination with £3.5 billion UK defence exports 2022
- Qatar imports: £1.2 billion including Typhoon aircraft in 2022
- Australia AUKUS deal projected £10 billion over decade from 2023
- Oman land systems exports: £0.8 billion in 2022
- Cyber security exports: £0.9 billion in 2022
- Drones and UAV exports: £0.6 billion growing 20% YoY 2022
- Ammunition exports: £1.0 billion in 2022 to NATO allies
- Training services exports: £0.7 billion including simulators 2022
- MRO exports: £1.1 billion for overseas fleets in 2022
- EU exports down to 12% of total post-Brexit in 2022
- India Typhoon deal potential £5 billion from 2023 negotiations
- Poland Ajax vehicles export order £0.4 billion in 2022
- Gulf states 45% of naval export orders in 2022
- Radar systems to Sweden: £0.3 billion in 2022
- Missile exports including Brimstone: £0.5 billion 2022
- Submarine export pipeline £20 billion by 2030 via AUKUS
- Space defence exports: £0.4 billion satellites and tech 2022
- Protective gear to Ukraine: £0.2 billion aid-linked 2022
- Comms systems to Baltic states: £0.3 billion 2022
Export Performance Interpretation
In 2022, the UK's defence industry, with BAE Systems as its formidable flagship, exported a cool £11.3 billion—proving that while Britannia no longer rules the waves, it certainly equips a significant portion of those who do, particularly in the Middle East, with everything from Typhoon jets to cyber security.
Government Spending and Procurement
- UK MOD equipment budget £18.1 billion in FY 2023/24
- Total UK defence budget £52.9 billion for 2023/24, 2.3% of GDP
- BAE Systems won £4.2 billion in MOD contracts in 2022
- Type 26 frigate programme cost £4.2 billion to date 2023
- F-35 procurement: 138 aircraft ordered for £9.1 billion total
- Ajax vehicle programme £5.5 billion contract value 2023
- RFA fleet solid stores ship £450 million procurement 2022
- Dreadnought submarine programme £31 billion estimated cost
- QinetiQ testing contracts £1.2 billion over 5 years 2023
- Cyber command investment £1.6 billion in 2023/24 budget
- Munitions procurement £3.5 billion urgently in 2023 response
- Challenger 3 upgrade £800 million contract 2023
- Sky Sabre air defence £500 million deployment 2022
- Babcock support contracts £2.1 billion for fleet 2023
- Leidos logistics £1.5 billion framework 2023-2028
- Rheinmetall ammo factory £300 million investment 2023
- MQ-9 Reaper sustainment £200 million annually
- Tempest demonstrator £1 billion phase 2 funding 2023
- Land C4ISR procurement £900 million in 2022/23
- Satellite comms upgrade £600 million Skynet 6 2023
- CBRN defence £250 million investment 2023
- Helicopter sustainment £1.8 billion Wildcat/Apache 2023
- Electronic warfare pods £400 million procurement 2022
- Training simulators £350 million Vulcan programme 2023
- Maritime mine countermeasures £1.1 billion MMCM 2023
- ISR drones £300 million Watchkeeper upgrade 2022
- Personal equipment £500 million next-gen 2023
Government Spending and Procurement Interpretation
While the £18.1 billion equipment budget meticulously parcels out everything from £450 million supply ships to a £31 billion Dreadnought, it reveals a strategic calculus where buying a single frigate costs the same as BAE's annual contract haul and keeping Reapers flying for a year could fund a new ammunition factory.
Research Development and Innovation
- Defence R&D budget £6.6 billion in 2023/24 including MOD £2.2bn
- Industry-funded defence R&D £2.8 billion in 2022
- Tempest/GCAP programme £2 billion committed to 2025
- AUKUS Pillar 2 R&D £4 billion UK share over 10 years
- DARPA-like innovation fund £800 million Innovate UK Defence 2023
- Quantum technologies for defence £200 million investment 2023
- AI defence projects 150 active with £500 million funding 2023
- Directed energy weapons demonstrator £100 million 2023
- Hypersonic missile research £1 billion programme 2023-2030
- Autonomy and robotics R&D £300 million in 2023 budget
- Space domain awareness £150 million UKSpace SSA 2023
- Synthetic biology for defence £50 million DSTL projects 2023
- 6G comms for military £120 million research 2023
- Patents in defence tech: 1,200 filed by UK firms 2022
- Collaborative R&D with NATO £400 million shared 2023
- Stealth materials advancement £80 million composites 2023
- Cyber resilience R&D £250 million NCSC-MOD 2023
- Biotech sensors for CBRN £60 million 2023 trials
- Digital twin tech for platforms £150 million adoption 2023
- Swarm drone algorithms £90 million DSTL 2023
- Exoskeleton prototypes £40 million soldier enhancement 2023
- Blockchain for supply chain £30 million pilot 2023
- AR/VR training R&D £70 million immersion 2023
- Fusion propulsion research £20 million space defence 2023
- Nanotechnology armours £50 million next-gen 2023
- EDGE accelerator startups 50 funded £100 million 2023
- Human-machine teaming AI £110 million 2023 projects
- Ocean sensing tech £80 million underwater 2023
Research Development and Innovation Interpretation
Britain is spending lavishly to think its way to the front, sprinkling billions like a caffeinated squirrel stashing high-tech nuts, ensuring our future arsenal is built more with brilliant code and quantum qubits than just brawn and battleships.
Sources & References
- Reference 1ADSGROUPadsgroup.org.ukVisit source
- Reference 2GOVgov.ukVisit source
- Reference 3PWCpwc.co.ukVisit source
- Reference 4ADSADVANCEadsadvance.co.ukVisit source
- Reference 5BMFSbmfs.co.ukVisit source
- Reference 6TECHUKtechuk.orgVisit source
- Reference 7DEFENCEIQdefenceiq.comVisit source
- Reference 8ONSons.gov.ukVisit source
- Reference 9MARKETSANDMARKETSmarketsandmarkets.comVisit source
- Reference 10LOGISTICSUKlogisticsuk.orgVisit source
- Reference 11SIPRIsipri.orgVisit source
- Reference 12IMECHEimeche.orgVisit source
- Reference 13UKSPACEukspace.orgVisit source
- Reference 14QINETIQqinetiq.comVisit source
- Reference 15NCSCncsc.gov.ukVisit source
- Reference 16APMapm.org.ukVisit source
- Reference 17CILTUKciltuk.org.ukVisit source
- Reference 18CIPDcipd.orgVisit source
- Reference 19FIAfia.org.ukVisit source
- Reference 20CQIcqi.org.ukVisit source
- Reference 21INCOSEUKincoseuk.netVisit source
- Reference 22RECRUITERrecruiter.co.ukVisit source
- Reference 23BAESYSTEMSbaesystems.comVisit source
- Reference 24BABCOCKINTERNATIONALbabcockinternational.comVisit source
- Reference 25ARMY-TECHNOLOGYarmy-technology.comVisit source
- Reference 26JANESjanes.comVisit source
- Reference 27NAVAL-TECHNOLOGYnaval-technology.comVisit source
- Reference 28BAE-SYSTEMSbae-systems.comVisit source
- Reference 29MBDA-SYSTEMSmbda-systems.comVisit source
- Reference 30COMMONSLIBRARYcommonslibrary.parliament.ukVisit source
- Reference 31UKRIukri.orgVisit source
- Reference 32UKIPOukipo.gov.ukVisit source
- Reference 33DSTLdstl.gov.ukVisit source