The UK government is set to boost its support for defence exporters with a £2 billion increase in the lending capacity of UK Export Finance (UKEF)
This is expected to help UK defence companies access more growth opportunities, create jobs, and strengthen the country’s competitive edge in the global defence industry.
Improving UK national security growth
The increase will raise UKEF’s Direct Lending capacity from £8 billion to £10 billion, creating opportunities for British defence firms to secure contracts with overseas governments.
These contracts will include key exports such as missiles, aircraft, and armoured vehicles, supporting the UK’s position as a leading global defence exporter.
This step is part of a wider plan to enhance the UK’s national security and economic growth. The defence sector plays a critical role in the nation’s security, and the government’s plan to increase defence spending to 2.5% of GDP by 2027 reflects the growing need for a strong, resilient defence industry.
The new £2 billion in UKEF funding will further ensure that UK firms remain competitive, facilitating the export of high-quality British defence goods and services to international markets.
UK government’s support for the defence sector
In 2023/24, UKEF issued £8.8 billion worth of loans, guarantees, and insurance, assisting 650 UK exporters and supporting 41,000 jobs nationwide.
This includes major deals such as an £8.8 billion guarantee for air defence system exports to Poland, support for Typhoon aircraft sales to Qatar, and the sale of ex-Royal Navy minehunting vessels to the Ukrainian Navy.
The UK’s ongoing commitment to its defence industry is also evidenced by the announcement of a £1.6 billion commitment for supplying advanced air defence missiles to Ukraine.
This commitment is expected to support the UK economy, supporting 700 existing jobs at Thales in Belfast. With the new £2 billion increase to UKEF’s lending capacity, this momentum is set to continue, unlocking even more opportunities for UK defence companies.
Defence exporters
The rise in UKEF’s Direct Lending capacity is a key component of the government’s upcoming Defence Industrial Strategy.
This strategy is designed to support the long-term growth of the UK’s defence sector, enhance supply chains, and foster the creation of high-skilled jobs in communities nationwide.
The initiative is part of the UK’s Plan for Change, which places national security and economic stability at the heart of government policy.
The defence sector is especially important to Scotland, where companies like Babcock and BAE Systems play a vital role in supporting UK defence capabilities. UKEF has previously supported Scottish defence businesses with loan guarantees, helping them secure international contracts. In 2023/24, Scotland’s defence industry received £2.14 billion in government spending, contributing significantly to local economies and creating thousands of jobs.
By increasing its lending capacity, the UK government is ensuring that defence companies, particularly those in regions like Scotland, will have the resources needed to expand their operations and secure future contracts.
This will strengthen national security and promote economic growth in key sectors, particularly in areas with a strong defence presence.
