UK sets bigger defence spending plan and export support

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UK defence spending plan

Highlights

UK defence spending will rise from £54 billion to nearly £80 billion annually by 2029, raising defence outlay from 2.3% to 2.7% of GDP.
Over £5 billion is allocated for drones and autonomous weapons, £64 billion for nuclear deterrent renewal, and 12 new F35A fighter jets.
A new £50 billion Defence Export facility and international collaborations, including £8.6 billion for the Tempest fighter, expand UK supply chains and NATO role.

Funding plan and military overhaul

As set out in the Prime Minister's speech published on GOV.UK, the government says the new plan is fully costed and funded through reallocations across departmental capital budgets rather than higher borrowing or cuts to day-to-day spending on frontline services such as health and education.

The Prime Minister says some capital projects, including certain roads and energy schemes, will no longer proceed as previously planned because defence is being treated as an immediate national priority. He says the plan preserves public investment at its highest sustained level since the 1970s while shifting one penny in every pound of capital spending toward security needs.

Under the plan, annual defence spending is rising from £54 billion before the government took office to almost £80 billion a year by 2029. The Prime Minister says that lifts defence spending from 2.3% of GDP in 2024 to 2.7%, with a trajectory toward 3% in the next parliament, while the broader security commitment reaches 4.2% of GDP.

The package includes more than £5 billion for drones and autonomous weapons, alongside investment in long-range missiles, armoured vehicles, counter-drone systems and AI protection. The government also confirms £64 billion for renewal of the nuclear deterrent, including new submarines, a sovereign warhead and 12 F35A fighter jets.

Jobs, exports and NATO role

The government says the investment will support almost 60,000 jobs and deepen the role of UK suppliers, SMEs and start-ups in defence supply chains. It also announces a new £50 billion Defence Export facility, described as the largest expansion of UK Export Finance support in its 100-year history.

The Prime Minister links the spending plan to wider efforts to strengthen a more European NATO while maintaining the transatlantic alliance with the U.S. Measures cited in the speech include precision-strike weapons development with Germany, frigate cooperation with Norway, £400 million for the UK's role in a Multilateral Defence Mechanism, and an £8.6 billion commitment to the Tempest fighter programme with Italy and Japan.

The speech also frames continued support for Ukraine as a central strategic objective. The Prime Minister says the Defence Investment Plan will maintain that backing in full, arguing that the outcome of the war will shape European security, defence spending needs and economic stability for decades.

Our earlier article on the UK power grid investment plan covered the National Energy System Operator’s estimate that Britain needs around £89 billion of upgrades through the 2030s to meet rising electricity demand and connect more offshore wind. It also noted that network charges already make up roughly a quarter of typical household bills, heightening policy pressure as upgrade costs ultimately feed into consumer energy prices.

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