New UK defense strategy to give priority to local firms, growth

U.K. defense companies will be prioritized for government contracts to ensure Britain has a resilient domestic supply chain that can “innovate at a wartime pace” under a strategy that creates jobs and boosts growth, the government will announce on Monday.

Defense Secretary John Healey will launch a new Defense Industrial Strategy in London, where he will promise to bring jobs to “every nation and region of the U.K.” under plans to lift annual defense spending to 2.5% of gross domestic product.

To ensure U.K. supply chains are resilient, the Ministry of Defense will launch a “first of its kind war game with the U.K. industry” to explore how to keep forces on the front line during disruption.

Healey plans to say that the strategy will make the sector an engine for U.K. growth and strengthen supply chains in critical industries including steel and semiconductors, according to a statement. Full spending plans will be set out in the spring, the MOD said.

Labour’s defense industrial strategy will be the first since 2021, before Russia invaded Ukraine, and comes amid mounting geopolitical threats across the world and escalating tensions between China and Taiwan. The U.K. is supplying weapons to Ukraine and has supported Israel during the war in Gaza, though the government recently suspended supplies.

It will pledge £19 million ($24 million) for Gaza on Monday, taking its commitment to £99 million, as Development Minister Anneliese Dodds travels to Palestinian areas and Israel this week. She described the situation in Gaza as “catastrophic,” according to prepared remarks.

Healey’s defense program will kick off a week of major policy announcements that Prime Minister Keir Starmer hopes will reset his administration after a turbulent few months since winning the election in July. A series of “measurable milestones” will be announced to show how Labour plans to deliver its five core missions.

Starmer has had a rocky start since his party’s landslide election victory, losing his chief of staff after revelations about ministers accepting freebies and, more recently, facing a backlash from business and farmers over Labour’s tax-raising budget.

Alongside the defense strategy, Healey will announce on Monday millions of pounds of investment by major defense contractors including BAE Systems, Rolls Royce and Babcock. The sector supports 434,000 jobs, two thirds of which are outside London and the Southeast, according to the MOD.

Healey will say: “Our defense sector should be an engine for jobs and growth, strengthening our security and economy. That requires a defense industry that is better and more integrated - one that can keep our armed forces equipped, innovating at a wartime pace, and ahead of our adversaries.

“We will mobilize the private sector to help face down global threats, direct more public investment to British businesses and create jobs and growth in every nation and region of the UK. National security is the foundation for national stability and growth.”

The government plans to publish the new strategy in the first half of 2025, with a remit to last until 2035. Investors, industry and unions have until the end of February to respond to an open consultation.