Beyond the front lines, the UK defence industry is a quiet economic powerhouse, injecting £25.6 billion into the national economy and supporting over 320,000 jobs from the factory floor to the local high street.
Key Takeaways
- In 2022, the UK defence sector contributed £25.6 billion to the UK economy through direct, indirect and induced Gross Value Added (GVA)
- The UK defence industry supported 323,400 jobs in 2022 across direct employment (91,400), indirect (127,900) and induced (104,100) roles
- Defence exports generated £11.3 billion in sales in 2022, representing a 15% increase from 2021
- The UK defence industry directly employs 91,400 people as of 2022
- Indirect employment supported by defence was 127,900 jobs in 2022
- Induced employment from defence spending totalled 104,100 in 2022
- UK Defence exports totalled £11.3 billion in 2022, up 15% from 2021
- UK ranked 6th globally in arms exports with 2.7% market share in 2018-2022
- Defence exports to Middle East accounted for 40% of total in 2022 (£4.5bn)
- Defence R&D spending by industry totalled £3.2 billion in 2022/23
- Government-funded defence R&D was £6.8 billion in 2022/23
- BAE Systems invested £1.4 billion in R&D in 2022, 5.5% of revenue
- MoD procurement budget for equipment was £24.1 billion in 2022/23
- Type 26 frigate programme contract value £4.2 billion for 8 ships with BAE
- Tempest/FCAS demonstrator Phase 2 £850 million contract to Team Tempest
The UK defence industry provides substantial economic value, generating billions for the economy and supporting hundreds of thousands of jobs.
Economic Contribution
- In 2022, the UK defence sector contributed £25.6 billion to the UK economy through direct, indirect and induced Gross Value Added (GVA)
- The UK defence industry supported 323,400 jobs in 2022 across direct employment (91,400), indirect (127,900) and induced (104,100) roles
- Defence exports generated £11.3 billion in sales in 2022, representing a 15% increase from 2021
- The sector's turnover reached £41.2 billion in 2022, up 12% from the previous year
- In 2021, the UK aerospace, defence, security and space sector generated £47 billion in turnover
- Defence R&D expenditure by industry was £3.2 billion in 2022/23
- The multiplier effect of defence spending contributed an additional £14.5 billion to GDP in 2022
- UK defence sector accounted for 1.1% of total UK GDP in 2022
- In 2023, BAE Systems reported £25.3 billion in annual revenue, with 40% from UK defence contracts
- Rolls-Royce defence aerospace division generated £3.1 billion in revenue in 2022
- QinetiQ's annual revenue reached £1.8 billion in fiscal year 2023, primarily from defence services
- The UK defence supply chain added £15.7 billion to the economy in 2022 via indirect contributions
- Defence sector investment in capital expenditure was £4.1 billion in 2022
- In 2022, the sector's productivity per employee was £280,000 GVA, 2.5 times the UK average
- UK MoD equipment spending supported £23 billion in industrial activity in 2022/23
- The defence sector's share of UK manufacturing output was 12% in 2022
- In 2023, Leonardo UK reported £2.9 billion in defence-related revenue
- MBDA's UK operations contributed £1.2 billion to turnover in 2022
- The sector paid £12.4 billion in wages in 2022
- Defence industry's tax contributions to HM Treasury were £6.8 billion in 2022
- In 2021/22, UK defence R&D by government was £2.9 billion, leveraging industry match
- The sector's export multiplier effect added £5.2 billion to the UK economy in 2022
- UK defence SMEs contributed £8.4 billion to sector turnover in 2022
- Total defence sector GVA growth was 8% year-on-year in 2022
- Babcock International's revenue from defence contracts was £4.5 billion in 2023
- In 2022, the UK's defence sector had an average wage 25% above national average at £52,000
- Defence capital investment as % of turnover was 10% in 2022
- The sector's contribution to UK balance of payments was +£7.1 billion in 2022
- Ultra Electronics (now part of Advent) had £1.1 billion defence revenue pre-acquisition in 2022
- Overall UK ADS sector turnover grew to £52 billion in 2023 estimates
Economic Contribution Interpretation
While it may be a necessary evil, the UK's defence industry is a startlingly productive one, acting as a high-wage, export-heavy economic engine that generates over £25 billion for the treasury, supports hundreds of thousands of jobs, and operates at a productivity level that makes the rest of British industry look like it's moving in slow motion.
Employment Statistics
- The UK defence industry directly employs 91,400 people as of 2022
- Indirect employment supported by defence was 127,900 jobs in 2022
- Induced employment from defence spending totalled 104,100 in 2022
- BAE Systems employs 40,500 people in the UK
- Rolls-Royce has 15,200 UK employees in defence and civil aerospace divisions combined
- QinetiQ employs 6,000 staff primarily in UK defence testing roles
- Leonardo UK workforce stands at 8,500 employees focused on defence electronics
- Babcock International employs 14,000 in UK defence services
- MBDA UK has 4,500 employees in missile systems development
- The defence sector's direct employment grew by 2.5% from 2021 to 2022
- 25% of UK defence jobs are in engineering and manufacturing roles
- Women represent 18% of the UK defence industry workforce in 2022
- Apprenticeships in defence numbered 12,000 active in 2022
- STEM skills shortage affects 40% of defence firms, with 15,000 vacancies unfilled
- Average tenure in UK defence jobs is 8.5 years, higher than national average
- Regional distribution: 35% of jobs in South East England
- Defence primes employ 60% of direct workforce, SMEs 40%
- 7,200 veterans employed in defence industry in 2022
- Youth employment (under 25) is 8% of workforce
- Diversity: BAME employees 12% in 2022, up from 10% in 2020
- Part-time workers 5% of defence workforce
- High-skilled roles (degree level) occupy 45% of positions
- Turnover rate in defence industry is 6.2% annually
- 22,000 jobs in shipbuilding and maritime defence
- Cyber defence roles grew by 20% to 5,500 jobs in 2022
- 10% of workforce aged over 55
- Female STEM roles in defence at 22% in 2023
- Total defence-related jobs including MoD civilians: 250,000
- Roke Manor employs 800 in defence R&D roles
- Frazer-Nash Consultancy has 500 staff in defence engineering
Employment Statistics Interpretation
While the UK's defence industry remains a formidable employer sustaining over 323,000 total jobs and critical national security, its engine is showing signs of strain, humming with ageing expertise, persistent skills gaps, and a workforce still struggling to fully reflect modern Britain.
Export Performance
- UK Defence exports totalled £11.3 billion in 2022, up 15% from 2021
- UK ranked 6th globally in arms exports with 2.7% market share in 2018-2022
- Defence exports to Middle East accounted for 40% of total in 2022 (£4.5bn)
- BAE Systems exported £10.2 billion worth of defence products in 2022
- Typhoon aircraft exports generated £6.5 billion since 2000 to nations like Qatar and Kuwait
- MBDA missile exports reached £3.8 billion in 2022
- UK naval exports including Type 31 frigates to Indonesia valued at £4.1 billion
- Land systems exports (Ajax vehicles) to Australia £1.2 billion potential
- Electronics and optronics exports £2.1 billion in 2022
- Saudi Arabia received 28% of UK defence exports in 2022 (£3.2bn)
- Qatar defence deals totalled £6 billion over 5 years to 2022
- UK share of global defence market 7.3% in exports 2022
- Airborne systems exports £1.9 billion in 2022
- Crowsnest radar system export potential to allies £500 million
- UK defence services exports grew 18% to £2.7 billion in 2022
- Top export product: Eurofighter Typhoon components £2.4 billion
- Exports to EU countries 12% of total (£1.35bn) in 2022 post-Brexit
- Poland Typhoon deal worth £7.9 billion signed 2022
- Rolls-Royce engines exported for defence £1.5 billion in 2022
- Leonardo helicopter exports (AW159) to Philippines £630 million
- UK arms export licences approved £9.8 billion in 2022
- Maritime exports including Astute submarines tech £1.8 billion cumulative
- Cyber security exports from UK defence firms £800 million in 2022
- UAE Typhoon jets deal £6.3 billion in 2021-2022
- Training and simulation exports £950 million in 2022
- Rheinmetall BAE joint venture exports potential £2 billion
- Oman Typhoon support contract £2.5 billion over 25 years
- India Hawk trainer exports legacy £1 billion since 2004
- Australia Loyal Wingman drone collaboration exports £400 million projected
- Total UK defence export pipeline £65 billion as of 2023
Export Performance Interpretation
Britain has deftly transformed its defense industry into a formidable export engine, where the mighty Typhoon rules the skies and its partnerships, from the Gulf to the Pacific, fuel a multi-billion pound pipeline that ensures both its economic and geopolitical influence remain thoroughly armed and operational.
Procurement and Contracts
- MoD procurement budget for equipment was £24.1 billion in 2022/23
- Type 26 frigate programme contract value £4.2 billion for 8 ships with BAE
- Tempest/FCAS demonstrator Phase 2 £850 million contract to Team Tempest
- Ajax vehicle programme £5.5 billion for 589 vehicles to General Dynamics
- A400M Atlas transport fleet sustainment £3 billion over 10 years
- Spear 3 missile contract £250 million to MBDA
- Challenger 3 tank upgrade £800 million with Rheinmetall BAE
- F-35 Lightning II sustainment £2.5 billion annual UK spend
- Skynet 6A satellite £500 million to Airbus
- Watchkeeper UAV sustainment £150 million extension
- Boxer vehicle procurement £2.5 billion for 623 units via Rheinmetall
- P-8 Poseidon maritime patrol 9 aircraft £1.9 billion
- DragonFire laser weapon £100 million development contract
- New Medium Helicopter Capability (NMHC) £900 million for 44 H145M
- Archerfish mine neutraliser £120 million to BAE
- M270 rocket launcher upgrade £200 million package
- Type 31 frigate £2 billion for 5 ships to Babcock
- Proteus autonomous underwater vehicle £50 million initial contract
- Land Ceptor air defence £300 million to MBDA
- E-7 Wedgetail £1.9 billion for 3 aircraft
- Truck (HX) programme £1.5 billion for 1,100 vehicles to Rheinmetall
- Brimstone missile extension £350 million
- Fleet Solid Support ships £4 billion competition ongoing
- Dreadnought submarine programme £31 billion total estimated
- RAF FGR4 Typhoon upgrade £1 billion
- Storm Shadow missile stock £500 million replenishment
- 32nd Regiment Rapier £250 million SAM upgrade
- Mechanical Combat Support Vehicle £800 million for Boxer variants
- Merlin helicopter life extension £500 million
- Joint Support Ship (Point class) sustainment £300 million
Procurement and Contracts Interpretation
The UK's defense procurement reads like a staggering tab for securing sovereign pride and procurement pain, from the Dreadnought's colossal shadow to the Ajax's troubled tracks.
R&D Investment
- Defence R&D spending by industry totalled £3.2 billion in 2022/23
- Government-funded defence R&D was £6.8 billion in 2022/23
- BAE Systems invested £1.4 billion in R&D in 2022, 5.5% of revenue
- UK Defence Science and Technology Laboratory (Dstl) budget £500 million annually
- Rolls-Royce R&D spend £1.1 billion including defence aero engines
- QinetiQ R&D investment £120 million in 2023
- Leonardo UK R&D £250 million focused on electronics and sensors
- MBDA R&D expenditure £800 million pan-European with UK share 30%
- Hypersonic weapons R&D programme £1 billion committed 2021-2025
- AI and autonomy R&D in defence £450 million via iUK programme 2023
- Quantum technologies for defence R&D £200 million funding
- Directed Energy Weapons (DEW) R&D £100 million Team HEP programme
- Tempest/GCAP next-gen fighter R&D £2 billion UK contribution to date
- Defence innovation funding via DIgital £100 million annually
- Space-based defence R&D £500 million Skynet replacement
- Cyber R&D investment £1.2 billion over 5 years to 2025
- Unmanned systems R&D £300 million Loyal Wingman project
- Materials and manufacturing R&D £150 million for composites
- Sensor fusion R&D via AWE £400 million atomic weapons enterprise
- 6G communications for defence R&D £50 million MOD investment
- Biotechnology defence applications R&D £80 million
- Swarm drone technologies R&D £120 million DragonFire related
- Stealth coatings R&D £90 million BAE investment
- Electronic Warfare R&D £200 million SPEAR capability
- Submarine power systems R&D £250 million PWR3 programme
- Defence S&T Centre funding £1 billion over 10 years
- Collaborative R&D with NATO £300 million UK share
- Green propulsion R&D £100 million sustainable aviation fuel defence
- Digital twin tech R&D £150 million across sector
R&D Investment Interpretation
While the government writes the large checks, it's the focused, almost obsessive, R&D spending by individual firms on everything from quantum sensors to sustainable jet fuel that stitches together the real technological edge of UK defence.
Sources & References
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- Reference 3BAESYSTEMSbaesystems.comVisit source
- Reference 4ROLLS-ROYCErolls-royce.comVisit source
- Reference 5QINETIQqinetiq.comVisit source
- Reference 6ONSons.gov.ukVisit source
- Reference 7LEONARDOleonardo.comVisit source
- Reference 8MBDA-SYSTEMSmbda-systems.comVisit source
- Reference 9BABCOCKINTERNATIONALbabcockinternational.comVisit source
- Reference 10ULTRAultra.groupVisit source
- Reference 11UKuk.leonardo.comVisit source
- Reference 12NCSCncsc.gov.ukVisit source
- Reference 13STEMstem.org.ukVisit source
- Reference 14ROKEroke.co.ukVisit source
- Reference 15FNCfnc.co.ukVisit source
- Reference 16SIPRIsipri.orgVisit source
- Reference 17RHEINMETALLrheinmetall.comVisit source
- Reference 18AWEawe.co.ukVisit source
- Reference 19DSTLdstl.gov.ukVisit source
- Reference 20NATOnato.intVisit source
- Reference 21AIRBUSairbus.comVisit source