Following another prosperous year for the UK’s Defence sector, the figures in this ADS Outlook Report underline the importance of the defence industry and the invaluable contribution it makes to both UK national security and prosperity. In 2015 the industry turned over £24bn – a rise of £2bn on 2014 – and directly employed 142,000 people. It continues to see average year-on-year growth, having risen by 18 per cent over the past five years.
The Government’s Strategic Defence and Security Review (SDSR) published in late 2015 offers a pragmatic response to the new and challenging threats facing the country. The review’s commitment to refresh defence industrial policy, focus on innovation, enhance exports and encourage more business with SMEs was greatly welcomed by the industry. These themes, together with a £178 billion defence equipment plan, provide industry with the confidence to invest in growth.
The relationship between industry and government has been significantly strengthened by the Defence Growth Partnership (DGP). The UK Defence Solutions Centre – a key DGP initiative – working alongside a strengthened UKTI DSO enables industry to present innovative and tailored solutions to customers worldwide, showcasing the very best of British expertise. Through its Innovation Challenges and the Dual Use Technology Exploitation cluster, SMEs from the complete value chain are benefitting from funding and fostering innovation through partnerships with adjacent industries. Ongoing support for the DGP continues to boost the competitiveness of UK industry, ensuring the UK is the preferred partner for international defence collaboration and innovation.
The growth of the industry is anticipated to continue, with nearly half of companies predicting growth of greater than ten per cent in the coming year. New export opportunities are a key driver of this, with 63 per cent of companies anticipating growth through securing business in international markets.
The Defence industry’s productivity has also increased by 29 per cent over the past five years, compared to gains of just two per cent in the rest of the economy. This is a clear indication that investment in R&D delivers a valuable return and contributes to our national prosperity.
While the sector remains a success story, there is still more to do to ensure it endures in the long-term. ADS will continue to work with industry and government to help inform and implement SDSR 2015. As defence budgets continue to come under pressure worldwide, international competition will strengthen and the demand for innovation will grow. Continued government support to industry is vital if companies are to have the confidence required to invest in innovation, delivering valuable productivity gains and enabling companies to boost their competitiveness.